Models of Growth with Imported Inputs

Bardhan, Pranab; Lewis, Sydney

doi:10.2307/2551937

Cited by 42 publications

(34 citation statements)

References 8 publications

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“…The model outlined in this section is based on a modified version of a two-gap growth model with imported factor inputs, introduced first by Bardhan and Lewis (1970) and modified by Ziesemer (1995) in order to make effects of technical change and income elasticities explicit. That model emphasizes the insights that for developing countries, imported inputs paid for by export revenues are the major mechanism of growth in the relation between export and growth, as put forward and empirically supported by Khan and Knight (1988).…”

Section: The Imported Inputs Growth Modelmentioning

confidence: 99%

“…If these two forces do not grow at the same speed, terms of trade change, unless one assumes a one good world where they are constant by construct. Another extension would be the reintroduction of domestic capital goods as in Bardhan/Lewis (1970) where the corresponding Cobb-Douglas parameter would be zero for countries with no capital goods production. But this is not relevant for Mauritius.…”

Section: Insert Figure 1 Over Herementioning

confidence: 99%

“…This model is developed from a slightly modified version of a two-gap growth model with imported inputs, introduced by Bardhan and Lewis (1970) and is used here to estimate and analyse the income and price elasticities of export demand for Mauritius, a country reported among the fastest growing economies in the world, but whose exports remain dominated only by textile and sugar products, therefore vulnerable to demand shifts in any of these products. The model also yields estimates for the total factor productivity growth and scale effects.…”

Section: Introductionmentioning

confidence: 99%

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Export demand elasticities and productivity as determinants of growth: estimates for Mauritius

Habiyaremye

Ziesemer

2012

Applied Economics

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In this paper, we combine the export-led and import-led growth hypotheses in a growth model in which the importation of foreign capital goods and the demand elasticities of own export products explain the growth opportunities and the technical progress of developing countries. This model, based on imported capital goods uses Mauritius' data on capital investment, employment, export partners' growth and terms of trade to estimate price and income elasticities of export demand, total-factor productivity growth and economies of scale. These elasticities are then used to assess how the growth in export partners' income is converted into domestic growth. The implications of the presence of low or high export demand elasticities are discussed by relating them to various strands of trade and growth literature. Based on the results of this estimation, we also calculate steady-state growth rates, engine and handmaiden effects of growth as well as the dynamic steady-state gains from trade for this latecomer export economy. The implications of steady state results are also discussed in the light of the Mauritian employment and growth perspectives.Keywords: Growth model, trade in capital goods, exports, total factor productivity JEL classification code: O11, O19, O41, F43 Abstract. In this paper, we combine the export-led and import-led growth hypotheses in a growth model in which the importation of foreign capital goods and the demand elasticities of own export products explain the growth opportunities and the technical progress of developing countries. This model, based on imported capital goods uses Mauritius' data on capital investment, employment, export partners' growth and terms of trade to estimate price and income elasticities of export demand, total-factor productivity growth and economies of scale. These elasticities are then used to assess how the growth in export partners' income is converted into domestic growth. The implications of the presence of low or high export demand elasticities are discussed by relating them to various strands of trade and growth literature. Based on the results of this estimation, we also calculate steady-state growth rates, engine and handmaiden effects of growth as well as the dynamic steady-state gains from trade for this latecomer export economy. The implications of steady state results are also discussed in the light of the Mauritian employment and growth perspectives.

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Section: The Imported Inputs Growth Modelmentioning

confidence: 99%

Section: Insert Figure 1 Over Herementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Export demand elasticities and productivity as determinants of growth: estimates for Mauritius

Habiyaremye

Ziesemer

2012

Applied Economics

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“…Improvements in factor productivity are also associated with technology transfer from abroad. The export sector serves as a vehicle for technology transfer through the importation of advanced capital goods, as elucidated by Bardhan and Lewis (1970), Chen (1979), and Khang (1987), and as a channel for positive inter-sectoral externalities through the development of efficient and internationally competitive management, training of workers, and the spill-over consequences of scale expansion (see Keesing, 1967, andFeder, 1983). These processes basically represent the "secular" or "trend" effects of export growth on output.…”

Section: (C) External Policiesmentioning

confidence: 99%

“…By enhancing profitability and the capacity to service external debt and, therefore improving credit-worthiness, the expansion of the export sector induces higher flows of direct foreign investment and foreign loans that enable an even higher rate of investment (and growth). Third, exports provide the necessary foreign exchange for importation of capital goods and raw materials for which there are no convenient domestic substitutes (Khang, 1968;Bardhan and Lewis, 1970). 36 For all the above reasons, superior export performance has generally been associated with superior growth performance, as documented by Balassa (1978), Krueger (1978), and Bhagwati and Srinivasan (1979).…”

Section: (C) External Policiesmentioning

confidence: 99%