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Remittances, Regional Integration, and Balance of Payments Constrained Growth in El Salvador

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  • Luis Rene Caceres

Abstract

This paper presents a reworking of Thirlwall's model of economic growth restricted by the balance of payments for El Salvador, taking into account its trade flows with the other Central American countries and its remittances. The results indicate that there is a restriction on the economic growth of this country determined by the economic growth of the other countries of the subregion. It is also found that the role of remittances in alleviating external restriction is low. Evidence is presented that this restriction can be overcome by increasing the quality of education. The work concludes by pointing out the urgency for Central American countries to substantially improve the quality of their educational systems, as a means of increasing their economic dynamism.

Suggested Citation

  • Luis Rene Caceres, 2021. "Remittances, Regional Integration, and Balance of Payments Constrained Growth in El Salvador," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(3), pages 1-50, March.
    • Handle: RePEc:ibn:ijefaa:v:13:y:2021:i:3:p:50
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    References listed on IDEAS

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    1. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    2. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 99-125.
    3. Connel Fullenkamp & Mr. Thomas F. Cosimano & Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 2008/001, International Monetary Fund.
    4. Jamison, Eliot A. & Jamison, Dean T. & Hanushek, Eric A., 2007. "The effects of education quality on income growth and mortality decline," Economics of Education Review, Elsevier, vol. 26(6), pages 771-788, December.
    5. Gabriel Porcile & Marcus Dutra & Antonio Meirelles, 2007. "Technology gap, real wages, and learning in a balance-of-payments---constrained growth model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(3), pages 473-500.
    6. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
    7. Pablo Chena, 2014. "Balance-of-payments-constrained growth in Argentina (1976-2006)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(4), pages 699-718.
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    10. Juan Carlos Moreno‐Brid, 2003. "Capital Flows, Interest Payments and the Balance‐of‐Payments Constrained Growth Model: A Theoretical and Empirical Analysis," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 346-365, May.
    11. Eduardo Loría, 2003. "The Mexican economy: balance-of-payments-constrained growth model--the importance of the exchange rate, 1970-1999," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(4), pages 661-691.
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    Cited by:

    1. Luis Rene Caceres, 2021. "Nafta and Mexico’s Economic Growth from a Gender Perspective," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(12), pages 1-90, December.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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