Keynesian and Schumpeterian efficiency in a BOP-constrained growth model

Abstract

The paper aims to contribute to the debate on specialization and growth in two forms. Firstly, it develops a North-South model in which the ratio between the income elasticity of exports and imports in the South (that gives the rate of growth compatible with external equilibrium) depends on the Keynesian and Schumpeterian efficiency of the pattern of specialization, as defined by Dosi et al (1990). The model draws on key insights of the technology gap literature to discuss how these efficiencies are related to the dynamics of technological learning. Secondly, the model is tested including the variables Keynesian and Schumpeterian efficiency in a Keynesian growth regression. Several estimation procedures are used to test the model, among which Finite Mixture Estimation, which allows for estimating the parameters for homogenous groups of countries.

Growth slowdowns at middle income levels: Identifying mechanisms of external constraints

“…In addition, based on the Structuralist approach, several studies have pointed out that most Latin American countries have reached middle‐income levels but are characterised by low investment in skills and capacities, which results in weak productivity gains. These works show that the growth constraints are associated with both little‐diversified productive structures, concentrated in the production of standardised goods and services, as well as with the external restriction determined by this productive specialisation (Bértola, 2015; Catela & Porcile, 2012; ECLAC, 2014; Foxley, 2012; Paus, 2014). Despite the historical heterogeneity of Latin America, this process reflects the current situation of most countries in this region, which have remained at middle‐income levels and have shown low long‐run growth rates (Paus, 2014).…”

Natural, Effective and Bop-Constrained Rates of Growth: Adjustment Mechanisms and Closure Equations

“…This ratio depends on the degree of diversification and technological intensity of the pattern of specialization. A more technologyintensive production structure is associated with higher technological capabilities, which allows the country to respond more effectively to changes in the global demand and competition, by raising 𝜀 (Araujo and Lima, 2007;Gouvea and Lima, 2010;Catela and Porcile, 2012;Cimole and Porcile, 2014). In other words, the higher the technological capabilities of the country, the higher are the income elasticity ratio and the equilibrium rate of growth.…”