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A Multi-Sectoral Balance-of-Payments-Constrained Growth Model with Sectoral Heterogeneity:International Competition, Productivity Dynamics, and Economic Growth

  • Hiroshi Nishi

This study builds a multi-sectoral balance-of-payments constrained growth model that incorporates some structural heterogeneity between sectors and countries, such as differences in labor productivity, price competition, share of exports and imports, and the quality of commodities. The model in the current paper generates more comprehensive results than Thirlwall (1979), Blecker (1998), and Araujo and Lima (2007), even though it contains their properties and reproduces their implications. Furthermore, as compared with these existing works, the current model sheds more light on the relationship between trade structure, international competition, productivity dynamics, and economic growth. It also shows an example of the fallacy of composition that there are differences between microeconomic and macroeconomic phenomena, by illustrating how changes in nominal wage, the Kaldor– Verdoorn effect, and the degree of market competition in both countries affect the economic growth of the home country.

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File URL: http://www.econ.kyoto-u.ac.jp/projectcenter/Paper/e-13-005.pdf
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Paper provided by Graduate School of Economics Project Center, Kyoto University in its series Discussion papers with number e-13-005.

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Length: 28 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:kue:dpaper:e-13-005
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  1. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  2. Ricardo Silva Azevedo Araujo & Fabricio Missio & Frederico Jayme Júnio, 2014. "An Extended Structural Economic Dynamics Approach To Balance-Of-Payments-Constrained Growth: Level Of The Real Exchange Rate And Endogenous Elasticities," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting] 117, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  3. Fabrício Missio & Frederico G. Jayme Jr, 2011. "Structural heterogeneity, and endogeneity of elasticites on the balance-of-payments constrained growth model," Textos para Discussão Cedeplar-UFMG td425, Cedeplar, Universidade Federal de Minas Gerais.
  4. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2006. "A Structural Economic Dynamics Approach To Balance-Of-Payments-Constrained Growth," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 119, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  5. Raphael Rocha Gouvêa & Gilberto Tadeu Lima, 2011. "Structural Change,Balance-of-Payments Constraint and Economic Growth: Evidence from the Multi-Sectoral Thirlwall’s Law," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 74, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  6. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
  7. Mario Cimoli & Gabriel Porcile, 2010. "Specialization, Wage Bargaining And Technology In A Multigoods Growth Model," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 219-238, 02.
  8. Kevin Nell, 2003. "A 'Generalised' Version of the Balance-of-Payments Growth Model: An application to neighbouring regions," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 249-267.
  9. Araujo, Ricardo, 2011. "Cumulative Causation in a Structural Economic Dynamic Approach to Economic Growth and Uneven Development," MPRA Paper 29960, University Library of Munich, Germany.
  10. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Araujo, Ricardo Azevedo & Teixeira, Joanílio Rodolpho, 2003. "An Extension of the Structural Change Model to International Economic Relations," MPRA Paper 53291, University Library of Munich, Germany.
  12. Robert A. Blecker, 1998. "International Competitiveness, Relative Wages, and the Balance-of-Payments Constraint," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 20(4), pages 495-526, July.
  13. 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.
  14. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
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