Technology, structural change and BOP-constrained growth: a structuralist toolbox

Abstract

The Latin American Structuralism (LAS) is a significant part of the heterodox tradition in the theory of long run growth, with a focus on the problems of developing economies which started their industrialization process when other regions had already accumulated substantial technological capabilities. The emergence of a centre-periphery system posed specific problems to growth and distribution in laggard economies which LAS discusses in a systematic way. In this paper we presented a simple model which, firstly, captures key insights of the LAS school, such as the persistency of technological asymmetries and structural heterogeneity; secondly, it can be used to analyze the impacts of shocks and policies based on how they affect supply-side and demand side parameters of the model; thirdly, it links more closely (Post-) Keynesian macroeconomics based on the BOP constraint with the evolutionary microeconomics concerned with the dynamics of learning; lastly, it can be used as a toolbox and a teachable model in the analysis of the interactions between structural change, technological catching up and long run growth.2

Endogenous norms in wage and price setting and hysteresis in the real exchange rate

“…Thus, the real exchange rate may gravitate toward some equilibrium if the balance of payments constraints binds, but there is no force that will necessarily drags it when there is a surplus. 29 Thus, an important policy implication of the paper is that the central bank should pay attention to the nominal exchange rate if the authorities care about the real exchange rate; for example, if following a recent literature, they believe that level of the real exchange rate may affect growth (Cimoli & Porcile, 2014;Razmi et al, 2012). Because the system may not converge to any predefined equilibrium real exchange rate (especially if the balance of payments shows a surplus), policies such as reserve accumulation and capital controls may play an important role in shaping the long-run evolution of the economy.…”

Productivity, social expenditure and income distribution in Latin America

“…As regards the production structure, a diversified economic structure with a large share of knowledge-intensive activities is necessary for equality because it sustains growth and employment (see Rodrik and McMillan, 2011;Cimoli and Porcile, 2014) and provides the income basis for taxes and transfers. In turn, redistributive institutions are necessary to ensure that taxes and transfers favor workers at the bottom of the income distribution and correct the negative impact on equality of skill-biased technical change.…”

Income distribution and external constraint: Brazil in the commodities boom

“…As in Cimoli and Porcile (2014), a lower gap reduces the opportunities of imitation and catching up, so the higher the gap, the higher its rate of change (see also Narula, 2004). As in Lima (2004), technological innovation is determined by distribution in a non-linear way.…”