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A New Interpretation of Kaldor's First Growth Law for Open Developing Countries

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  • Penelope Pacheco-Lopez
  • A.P.Thirlwall

    ()

Abstract

Kaldor’s first law of growth posits a positive causal relation between the growth of manufacturing output and the growth of GDP due to static and dynamic returns to scale in manufacturing and rising productivity outside the manufacturing sector as resources are transferred from diminishing returns activities. In an open economy, however, the Kaldor first law of growth is open to another interpretation because it is apparent across countries that there is a close association between manufacturing output growth and export growth, and between export growth and GDP growth. Results are presented for 89 developing countries over the period 1990-2011, also distinguishing between low income, lower-middle income and upper-middle income countries, and between the continents of Africa, Asia and Latin America.

Suggested Citation

  • Penelope Pacheco-Lopez & A.P.Thirlwall, 2013. "A New Interpretation of Kaldor's First Growth Law for Open Developing Countries," Studies in Economics 1312, School of Economics, University of Kent.
  • Handle: RePEc:ukc:ukcedp:1312
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    File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/1312.pdf
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    References listed on IDEAS

    as
    1. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-348, November.
    2. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
    3. Feder, Gershon, 1983. "On exports and economic growth," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 59-73.
    4. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208.
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    Cited by:

    1. repec:eee:streco:v:42:y:2017:i:c:p:56-66 is not listed on IDEAS
    2. Amat Adarov & Mario Holzner & Luka Sikic, 2016. "Backwardness, Industrialisation and Economic Development in Europe," wiiw Balkan Observatory Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.
    3. repec:lje:journl:v:22:y:2017:i:sp:p:73-110 is not listed on IDEAS

    More about this item

    Keywords

    Kaldor’s growth laws; manufacturing growth; export growth; GDP growth;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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