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The economics of demand-led growth: theory and evidence for Brazil

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  • Costa da Silva, Guilherme Jonas
  • Guimarães e Souza, Gustavo José
  • Nabakashi, Luciano
  • Oreiro, José Luis

Abstract

This article describes the theory of demand-led growth and provides evidence that a demand-led growth regime exists in the Brazilian economy. Based on the methodology developed by Atesoglu (2002), econometric tests of this hypothesis show that almost 85% of the growth rate of real GDP in the period 1990-2005 is explained by demand-side variables, mainly exports and government consumption. As the current fiscal crisis rules out fiscal expansion, Brazil's only option is to adopt an export-led growth model. The article also shows that the maintenance of undervalued real exchange rate is a major determinant of export growth in developing countries such as Brazil.

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  • Costa da Silva, Guilherme Jonas & Guimarães e Souza, Gustavo José & Nabakashi, Luciano & Oreiro, José Luis, 2012. "The economics of demand-led growth: theory and evidence for Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    • Handle: RePEc:ecr:col070:11588
    Note: Includes bibliography
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    2. Costa da Silva, Guilherme Jonas & Guimarães e Souza, Gustavo José & Nabakashi, Luciano & Oreiro, José Luis, 2012. "The economics of demand-led growth: theory and evidence for Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
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    Cited by:

    1. Fabrício J. Missio & Frederico G. Jayme Jr. & Gustavo Britto & José Luis Oreiro, 2015. "Real Exchange Rate and Economic Growth: New Empirical Evidence," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 686-714, November.
    2. Christine Carton Madura, 2009. "Mecanismos kaldorianos del crecimiento regional: Aplicación empírica al caso del ALADI (1980-2007)," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 8, pages 1-24, May.
    3. Costa da Silva, Guilherme Jonas & Guimarães e Souza, Gustavo José & Nabakashi, Luciano & Oreiro, José Luis, 2012. "The economics of demand-led growth: theory and evidence for Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    4. Bibhuti Ranjan Mishra, 2020. "Role of External and Domestic Demand in Economic Growth: A Study of BRICS Countries," Global Business Review, International Management Institute, vol. 21(2), pages 547-566, April.
    5. Doré, Natalia I. & Teixeira, Aurora A.C., 2023. "The role of human capital, structural change, and institutional quality on Brazil's economic growth over the last two hundred years (1822–2019)," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 1-12.
    6. Cristian Dragos Turcan & Viorel - Costin Banta & Sabin – Alexandru Babeanu, 2021. "Initiation And Planning Of An Information System. A Case Study," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(49), pages 43-48, August.
    7. Guizzo, Danielle & Strachman, Eduardo & Dalto, Fabiano & Feijo, Carmem, 2018. "Financialisation and Development: how can emerging economies catch up?," MPRA Paper 87076, University Library of Munich, Germany.
    8. Miguel A. León-Ledesma & Matteo Lanzafame, 2010. "The Endogenous Nature of the ‘Natural’ Rate of Growth," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 10, Edward Elgar Publishing.

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