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Structural change, National Innovation System and balance-of-payments constraint: a theoretical and empirical analysis of the Brazilian case

Author

Listed:
  • Jo„o Prates Romero

    (Cedeplar/UFMG)

  • FabrÌcio Silveira

    (Cedeplar/UFMG)

  • Gustavo Britto

    (Cedeplar/UFMG T)

Abstract

The paper explores the relationship between the income elasticities of demand for exports and for imports, economic growth, the technological content of local production, and the level of development of the National Innovation System (NIS). According to the literature, differences in long-run growth rates are associated with differences in the income elasticities of demand, which would in turn be determined by the maturity of the NIS. Mature NIS imply higher degrees of product diversification, leading to trade patterns which favour exports of goods with higher technological content (high income elasticity of demand), and imports of basic goods (low income elasticity). Hence, we test the relationship between the exports and imports of Brazilian high-tech products and the number of Brazilian patents registered in the USPTO, as a proxy for the level of development of the Brazilian NIS. The results of the analysis are corroborated by the investigation of innovations of the variables, through impulse response functions and forecast error decomposition, which confirm the theoretical hypothesis discussed.

Suggested Citation

  • Jo„o Prates Romero & FabrÌcio Silveira & Gustavo Britto, 2011. "Structural change, National Innovation System and balance-of-payments constraint: a theoretical and empirical analysis of the Brazilian case," Textos para Discussão Cedeplar-UFMG 440, Cedeplar, Universidade Federal de Minas Gerais.
  • Handle: RePEc:cdp:texdis:td440
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    File URL: http://www.cedeplar.ufmg.br/pesquisas/td/TD%20440.pdf
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    References listed on IDEAS

    as
    1. Nelson H. Barbosa-Filho, 2001. "The balance-of-payments constraint:from balanced trade to sustainable debt," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 54(219), pages 381-400.
    2. Louis T. Wells, 1969. "Test of a Product Cycle Model of International Trade: U. S. Exports of Consumer Durables," The Quarterly Journal of Economics, Oxford University Press, vol. 83(1), pages 152-162.
    3. Raphael Rocha Gouvea & Gilberto Tadeu Lima, 2010. "Structural change, balance-of-payments constraint, and economic growth: evidence from the multisectoral Thirlwall's law," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 33(1), pages 169-204, October.
    4. Lima, Gilberto Tadeu & Carvalho, Veridiana Ramos da Silva, 2009. "Estrutura produtiva, restrição externa e crescimento econômico: a experiência brasileira," Revista Economia e Sociedade, Instituto de Economia, Universidade Estadual de Campinas (UNICAMP), vol. 36, pages 1-30, April.
    5. Irving B. Kravis & Robert E. Lipsey, 1971. "Price Competitiveness in World Trade," NBER Books, National Bureau of Economic Research, Inc, number krav71-1.
    6. Juan Carlos Moreno-Brid, 2003. "Capital Flows, Interest Payments and the Balance-of-Payments Constrained Growth Model: A Theoretical and Empirical Analysis," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 346-365, May.
    7. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
    8. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    9. Gustavo Britto & John S. L. McCombie, 2009. "Thirlwall's law and the long-term equilibrium growth rate: an application to Brazil," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(1), pages 115-136, September.
    10. Barker, Terry S, 1977. "International Trade and Economic Growth: An Alternative to the Neoclassical Approach," Cambridge Journal of Economics, Oxford University Press, vol. 1(2), pages 153-172, June.
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    More about this item

    Keywords

    Balance-of-Payments Constraint; Income Elasticities; Growth; Structural Change; National Innovation System.;

    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
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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