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A North-South Model of Economic Growth, Technological Gap, Structural Change and Real Exchange Rate

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  • Gabriel, Luciano Ferreira
  • Jayme, Frederico G.
  • Oreiro, José Luis

Abstract

The aim of this work is to present a model of economic growth, technological gap, structural change and real exchange rate in a formal and theoretical manner, explicitly incorporating the effects of North–South technology gap and the real exchange rate (RER) at a level compatible with its “industrial equilibrium” taking in account the external constraint. In the short term, an increase in the South growth rate of the demand implies that its natural growth rate must also rise, i.e., the level of industry participation and economic productivity should also increase. In the long run the effect of RER on economic growth is conditional on the size of the technological gap and the level of industry participation in South gross domestic product. This condition generates two different dynamics such as a saddle path and multiple equilibriums. To a large extent these results are achieved from the model complex dynamics.

Suggested Citation

  • Gabriel, Luciano Ferreira & Jayme, Frederico G. & Oreiro, José Luis, 2016. "A North-South Model of Economic Growth, Technological Gap, Structural Change and Real Exchange Rate," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 83-94.
    • Handle: RePEc:eee:streco:v:38:y:2016:i:c:p:83-94
    DOI: 10.1016/j.strueco.2016.03.003
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    3. Oreiro, José L. & da Silva, Kalinka M. & Dávila-Fernández, Marwil J., 2020. "A New Developmentalist model of structural change, economic growth and middle-income traps," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 26-38.
    4. 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.
    5. Guilherme R. Magacho & John S. L. McCombie, 2020. "Structural change and cumulative causation: A Kaldorian approach," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 633-660, July.
    6. Carvalho, Luciano Dias de & D'Amato, Stefan Wilson, 2021. "Exchange rate regimes, structural change and capital mobility in a developing economy," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    7. Gabriel Porcile & Danilo Sartorello Spinola, 2018. "Natural, Effective and BOP-Constrained Rates of Growth: Adjustment Mechanisms and Closure Equations," PSL Quarterly Review, Economia civile, vol. 71(285), pages 139-160.
    8. Spinola, Danilo, 2023. "Instability constraints and development traps: an empirical analysis of growth cycles and economic volatility in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    9. Douglas Alencar & Frederico G. Jayme Jr & Gustavo Britto, 2021. "A post-Kaleckian model with productivity growth and real exchange rate applied to selected Latin American countries," PSL Quarterly Review, Economia civile, vol. 74(297), pages 127-146.
    10. Marwil J. Dávila-Fernández, 2020. "Alternative approaches to technological change in a small open economy," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 279-317, April.
    11. Yohanna Panshak & Irfan Civcir & Hüseyin Ozdeser, 2019. "Technology Gap and the Role of National Innovation System in a Balance of Payments Constrained Growth Model: Empirical Evidence From Nigeria," SAGE Open, , vol. 9(1), pages 21582440198, February.
    12. Dávila-Fernández, Marwil J. & Sordi, Serena, 2019. "Distributive cycles and endogenous technical change in a BoPC growth model," Economic Modelling, Elsevier, vol. 77(C), pages 216-233.
    13. M.M. Ihnatenko & L.O. Marmul & D.S. Ushakov & S.P. Kuchyn, 2019. "Transformation of Approaches to Determine Influence Factors in the Economic Development Models," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 290-301.
    14. Marwil J. Dávila-Fernández, 2018. "Alternative Approaches to Technological Change when Growth is BoPC," Department of Economics University of Siena 795, Department of Economics, University of Siena.

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    More about this item

    Keywords

    Economic growth; Technology; Exports and real exchange rate (RER);
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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