Operationalizing growth models

Abstract

We introduce a novel approach to operationalizing growth models. Drawing on the most recent release of OECD Input–Output Tables, we compute the import-adjusted growth contributions of consumption, investment, government expenditures, and exports for sixty-six countries in the years 1995–2007 and 2009–2018, covering not only advanced Western economies but also Central and Eastern European, South-East Asian, and Latin American countries. We find that most are export-led or domestic demand-led and other forms of growth are rare. Our results differ from other classifications in that they reveal important geographical variation as well as temporal change. In a subsequent step, we illustrate the utility of the methodology by investigating the link between real exchange rate devaluation and export-led growth, a contentious issue in the existing literature. For pre-crisis advanced Western economies, we find an association between the two variables, which is statistically significant only when our new indicator is used.

Growth models, industrial relations institutions and labour market policies in Ireland, Portugal and Slovenia

“…In this regard, one should be cautious when considering Baccaro and Hadziabdic's (2023) calculations based on the import-adjustment method where they argue that since the crisis Portugal has been a strongly export-oriented economy because this change has mainly been due to tourism and not important increases in exports of manufacturing goods, which sets apart Portugal from Ireland and Slovenia.…”

“…Net exports as a share of GDP hovered around 0%, yet this does not capture the importance of exports for the Slovenian economy because the share of exports (% of GDP) grew from 50% in the early 2000s to almost 70% just prior to the crisis. Significantly, Baccaro and Hadziabdic's (2023) import-adjusted data show the contribution of exports exceeded 50% of the total contribution to growth between 1995 and 2007.…”

“…The importance of exports hence increased since net exports accounted for almost 10% of GDP, while exports have also been essential for maintaining the high level of private consumption. The importance of exports, according to Baccaro and Hadziabdic's (2023) calculations using the importadjustment method, from 2009 to 2018 contributed over 97% to GDP growth. The Slovenian economy became even more reliant on exports than before the crisis.…”

“…For other approaches to different growth model analysis, see:Stockhammer and Wildauer (2016);Baccaro and Benassi (2017);Picot (2021),Baccaro and Pontusson (2021);Stockhammer and Kohler (2022),Baccaro and Neimanns (2022),Reisenbichler and Wiedemann (2022);Ban and Adascalitei (2022),Sierra (2022), andBaccaro and Hadziabdic (2023).…”

Wage- or Profit-Led Regime? The Case of Poland

“…Furthermore, in later work [Baccaro, Hadziabdic, 2023], the political economists appreciate this distinction and point out that an economy based on a wage-or profit-led regime (in a post-Keynesian/neo-Kaleckian sense) is not the same as the actual growth caused by changes in the profit share. Thus, their finding that Poland was a "strongly export-led" economy from 2009 to 2018 is not of particular relevance to the subject and findings of this study.…”