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Thirlwall’s law, uneven development, and income distribution

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  • Hiroaki Sasaki

Abstract

This study builds a North–South trade and uneven development model and investigates the effects of changes in income distribution (the profit share) on economic growth rates of both countries. How a change in each country’s profit share affects both countries’ growth rates differs for the short‐ and long‐run equilibria. For example, in the short‐run equilibrium, an increase in the North’s profit share deteriorates the terms of trade and then decreases the South’s growth rate. On the other hand, in the long‐run equilibrium, an increase in the North’s profit share either increases or decreases the South’s growth rate through Thirlwall’s law.

Suggested Citation

  • Hiroaki Sasaki, 2021. "Thirlwall’s law, uneven development, and income distribution," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 592-611, July.
    • Handle: RePEc:bla:metroe:v:72:y:2021:i:3:p:592-611
    DOI: 10.1111/meca.12335
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    References listed on IDEAS

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    9. Hiroaki Sasaki, 2013. "Cyclical growth in a Goodwin–Kalecki–Marx model," Journal of Economics, Springer, vol. 108(2), pages 145-171, March.
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    Cited by:

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    3. Sasaki, Hiroaki & Sonoda, Ryunosuke, 2022. "International competition, income distribution, and North-South uneven development under the balance of payments constraint," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 9-23.
    4. Önder Nomaler & Danilo Spinola & Bart Verspagen, 2024. "Demand‐led industrialisation policy in a dual‐sector small open economy," Metroeconomica, Wiley Blackwell, vol. 75(3), pages 339-376, July.
    5. Musa Esuwa Shingil & Huseyin Ozdeser & Andisheh Saliminezhad, 2022. "Investigation of Balance of Payment Constrained Growth Model: The Impact of Export Growth, Capital Flows, and Real Effective Exchange Rate on Growth of the UK," SAGE Open, , vol. 12(2), pages 21582440221, May.
    6. Robert A. Blecker, 2022. "New advances and controversies in the framework of balance‐of‐payments‐constrained growth," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 429-467, April.
    7. Marwil J Dávila-Fernández & Jose Luis Oreiro, 2023. "Competitiveness and dynamic cumulative causation in an export-led growing economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 522-550.

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