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Manufactoring, economic growth, and real exchange rate: Empirical evidence in panel data and input-output multipliers

Author

Listed:
  • Luciano Ferreira Gabriel

    (Universidade Federal de Vinosa)

  • Luiz Carlos De Santana Ribeiro

    (Universidade Federal de Sergipe and National Council for Scientific and Technological Development (CNPq))

  • Frederico Gonzaga Jayme Jr.

    (Universidade Federal de Minas Gerais and CNPq)

  • Jose Luis Oreiro

    (Universidade de Brasilia and CNPq)

Abstract

This paper investigates the effects of manufacturing and of the real exchange rate (RER) on real per capita income growth. We use dynamic panel models and the calculation of output and employment multipliers for a diversified sample of countries from 1990 to 2011. Three important results can be highlighted. First, we provide new evidence that manufacturing is the most important tradable sector for achieving greater real per capita income growth for developing countries. Second, the greater a country's gap in relation to the technological frontier, the greater the positive effect of an undervalued RER on the real per capita incomegrowth rate. Finally, the manufacturing industry's output multipliers and employment multipliers in the developing countries are higher than those in in developed ones, in all years analyzed.

Suggested Citation

  • Luciano Ferreira Gabriel & Luiz Carlos De Santana Ribeiro & Frederico Gonzaga Jayme Jr. & Jose Luis Oreiro, 2020. "Manufactoring, economic growth, and real exchange rate: Empirical evidence in panel data and input-output multipliers," PSL Quarterly Review, Economia civile, vol. 73(292), pages 51-75.
    • Handle: RePEc:psl:pslqrr:2020:13
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    References listed on IDEAS

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    Cited by:

    1. Basil Oberholzer, 2021. "Managing commodity booms: Dutch disease and economic performance," PSL Quarterly Review, Economia civile, vol. 74(299), pages 307-323.
    2. Jose Luis da Costa Oreiro & Stefan Wilson d'Amato & Luciano Luiz Manarin D'Agostini & Paulo Sergio de Oliveira Simoes Gala, 2022. "Measuring the technological backwardness of middle-and low-income countries: The employment quality gap and its relationship with the per capita income gap," PSL Quarterly Review, Economia civile, vol. 75(301), pages 139-159.
    3. Theo Santini & Ricardo Azevedo Araujo, 2021. "Productivity growth and sectoral interactions under Domar aggregation: a study for the Brazilian economy from 2000 to 2014," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-30, December.
    4. Ebeling, Francisco, 2022. "Can fossil fuel endowments steer economic development? Evidence from the linkages approach," Resources Policy, Elsevier, vol. 78(C).
    5. Porcile, Gabriel & Sartorello Spinola, Danilo & Yajima, Giuliano, 2020. "Patterns of growth in structuralist models: The role of the real exchange rate and industrial policy," MERIT Working Papers 2020-027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Hugo Iasco-Pereira & Fabricio José Missio, 2022. "Would a competitive real exchange rate be a driver of economic prosperity?," PSL Quarterly Review, Economia civile, vol. 75(303), pages 355-383.
    7. Wolf, Christina, 2023. "Demand-growth in support of structural change: Evidence from Nigeria's formal manufacturing sector," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 347-358.
    8. JosŽ Luis Oreiro & Luciano Luiz Manarin & Paulo Gala, 2020. "Deindustrialization, economic complexity and exchange rate overvaluation: the case of Brazil (1998-2017)," PSL Quarterly Review, Economia civile, vol. 73(295), pages 313-341.

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    More about this item

    Keywords

    Manufacturing; real exchange rate; economic growth; input-output multipliers;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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