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Economic Integration, Sectoral Diversification, and Exchange Rate Policy in a Developing Economy

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  • Gabriel Srour

Abstract

The paper develops a simple three-sector model of a developing country with nominal wage rigidity, in which one sector is thought of as the primary sector and the other two are sectors in which the country can diversify. The paper then analyzes the relationship between the market structure of the nonprimary sectors and equilibrium adjustments to shocks in the primary sector. In particular, the paper examines under what conditions the country should promote one nonprimary sector over another. Among other things, it argues that developing countries should promote those sectors that are more integrated with the outside world

Suggested Citation

  • Gabriel Srour, 2004. "Economic Integration, Sectoral Diversification, and Exchange Rate Policy in a Developing Economy," IMF Working Papers 2004/060, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/060
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    References listed on IDEAS

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    Cited by:

    1. Gabriel Srour, 2006. "The Implications of Trade Barriers for Sectoral Diversification and Macroeconomic Stability in Developing Economies," IMF Working Papers 2006/050, International Monetary Fund.

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