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North-South Uneven Development and Income Distribution under the Balance of Payments Constraint

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  • Sasaki, Hiroaki

Abstract

This study builds a North-South trade and uneven development model, and investigates the effects of changes in income distribution (the profit share) on economic growth rates of both countries. How a change in the profit share affects both countries' growth rates differs for the short-run equilibirum and the long-run equilibrium. For example, in the short-run equilibirum, an increase in the profit share of the North deteriorates the terms of trade of the South, and then, decreases the growth rate of the South. On the other hand, in the long-run equilibrium, an increase in the profit share of the North either increases or decreases the growth rate of the South through Thirlwall's law.

Suggested Citation

  • Sasaki, Hiroaki, 2019. "North-South Uneven Development and Income Distribution under the Balance of Payments Constraint," MPRA Paper 91469, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:91469
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    File URL: https://mpra.ub.uni-muenchen.de/91469/1/MPRA_paper_91469.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Elias Soukiazis & Pedro A. Cerqueira (ed.), 2012. "Models of Balance of Payments Constrained Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-02395-7.
    3. Amitava Krishna Dutt, 2002. "Thirlwall’s Law and Uneven Development," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(3), pages 367-390, March.
    4. J. S. L. McCombie & A. P. Thirlwall, 1994. "Economic Growth and the Balance-of-Payments Constraint," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-23121-8.
    5. Blecker, Robert A., 1996. "The new economic integration: Structuralist models of North-South trade and investment liberalization," Structural Change and Economic Dynamics, Elsevier, vol. 7(3), pages 321-345, September.
    6. Maurizio Pugno, 1998. "The Stability of Thirlwall’s Model of Economic Growth and the Balance-Of-Payments Constraint," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 20(4), pages 559-581, July.
    7. Leonardo Vera, 2006. "The balance-of-payments—constrained growth model: a north—south approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(1), pages 67-92.
    8. Hiroaki Sasaki, 2013. "Cyclical growth in a Goodwin–Kalecki–Marx model," Journal of Economics, Springer, vol. 108(2), pages 145-171, March.
    9. Dutt, Amitava Krishna, 1996. "Southern Primary Exports, Technological Change and Uneven Development," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 73-89, January.
    10. Hiroaki Sasaki, 2008. "North-South Ricardian trade and growth under the balance-of-payments constraint," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(2), pages 299-324, December.
    11. Findlay, Ronald, 1980. "The Terms of Trade and Equilibrium Growth in the World Economy," American Economic Review, American Economic Association, vol. 70(3), pages 291-299, June.
    12. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.
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    More about this item

    Keywords

    North-South trade; Thirlwall's law; uneven development; income distribution;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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