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Commodity dependence, structural reforms, and commodity trap: South America 1970-2017

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  • Fernando Isabella

Abstract

Commodity dependence is a long-lasting feature of South American economies,with far reaching effects in economic and social performance. This paper focuses in the interactionbetween commodity prices and real exchange rate and in its effects on productive capabilities.New-Developmentalist approach has labeled that situation as a “Dutch-Disease”. Ipropose a Balance of Payment Constraint Growth model especially designed to address somespecificities of commodity dependence that allow to theoretically analyze this issue. Empiricaltests are conducted for the period 1970-2017. It is found that price surges are damaging forproductive capabilities only in the context of the dismantling of state intervention. JEL Classification: C23; E12; 011.

Suggested Citation

  • Fernando Isabella, 2024. "Commodity dependence, structural reforms, and commodity trap: South America 1970-2017," Brazilian Journal of Political Economy, Center of Political Economy, vol. 44(3), pages 421-441.
    • Handle: RePEc:ekm:repojs:v:44:y:2024:i:3:p:421-441:id:2462
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    More about this item

    Keywords

    Real exchange rate; balance of payments constraint growth model; commodity- dependence;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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