IDEAS home Printed from https://ideas.repec.org/a/oup/cambje/v42y2018i3p617-632..html
   My bibliography  Save this article

Industrial policy and exchange rate scepticism
[Open economy models of distribution and growth]

Author

Listed:
  • Luiz Carlos Bresser-Pereira
  • Fernando Rugitsky

Abstract

The aim of the present paper is to put in historical perspective the development thinking on the relationship between industrial and exchange rate policies. The first section focuses on the thought of the so-called pioneers of development economics, specifically their preference for protectionism and their belated recognition that an exchange rate policy could act as a substitute to it. In the second one, we analyse the origins of exchange rate scepticism. The third section briefly complements the previous discussion with reference to macroeconomic formulations that allow for short-run contractionary effects of a devaluation, reinforcing the scepticism in question. In the fourth section, we discuss the revival of development thinking in the 1980s and its discussion about East Asian trajectories, a literature that placed great emphasis on industrial policy. Finally, in the fifth section, we discuss the new historical facts and the new development macroeconomics models that are putting an end to exchange rate scepticism.

Suggested Citation

  • Luiz Carlos Bresser-Pereira & Fernando Rugitsky, 2018. "Industrial policy and exchange rate scepticism [Open economy models of distribution and growth]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(3), pages 617-632.
  • Handle: RePEc:oup:cambje:v:42:y:2018:i:3:p:617-632.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/cje/bex004
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
    2. 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.
    3. Hirschman,Albert O., 1981. "Essays in Trespassing," Cambridge Books, Cambridge University Press, number 9780521282437, September.
    4. Luiz Carlos Bresser-Pereira & Yoshiaki Nakano, 2003. "Economic growth with foreign savings?," Brazilian Journal of Political Economy, Center of Political Economy, vol. 23(2), pages 163-188.
    5. Arslan Razmi, 2007. "The Contractionary Short-Run Effects of Nominal Devaluation in Developing Countries: Some Neglected Nuances," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(5), pages 577-602.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernando Rugitsky, 2017. "The rise and fall of the Brazilian economy (2004-2015): the economic antimiracle," Working Papers, Department of Economics 2017_29, University of São Paulo (FEA-USP).
    2. Cícero, Vinicius Curti & Lima, Gilberto Tadeu, 2023. "Functional distribution of income as a determinant of importing behavior: An empirical analysis," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 393-405.
    3. Firat Demir & Arslan Razmi, 2022. "The Real Exchange Rate And Development Theory, Evidence, Issues And Challenges," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 386-428, April.
    4. Wolf, Christina, 2023. "Demand-growth in support of structural change: Evidence from Nigeria's formal manufacturing sector," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 347-358.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ganguly, Arpan & Spinola, Danilo, 2024. "Growth and distribution regimes under global value chains: Diversification, integration, and uneven development," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 634-649.
    2. Rafael Saulo Marques Ribeiro & John S. L. McCombie & Gilberto Tadeu Lima, 2017. "Some unpleasant currency-devaluation arithmetic in a post Keynesian macromodel," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(2), pages 145-167, April.
    3. 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.
    4. Bresser-Pereira, Luiz Carlos, 2016. "Why the ‘Rest’ doesn’t need foreign finance," Textos para discussão 415, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    5. Emboava Vaz, João, 2024. "Impacts of US interest rates on growth, income distribution, and macroeconomic policy space in developing countries: A SFC supermultiplier model," IPE Working Papers 228/2024, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Cícero, Vinicius Curti & Lima, Gilberto Tadeu, 2023. "Functional distribution of income as a determinant of importing behavior: An empirical analysis," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 393-405.
    7. Ribeiro, Rafael S.M. & McCombie, John S.L. & Lima, Gilberto Tadeu, 2020. "Does real exchange rate undervaluation really promote economic growth?," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 408-417.
    8. A.P. Thirlwall, 2018. "Una vita nell’economia," Moneta e Credito, Economia civile, vol. 71(283), pages 179-210.
    9. Fischer, A.M., 2017. "Dilemmas of externally financing domestic expenditures: Rethinking the political economy of aid and social protection through the monetary transformation dilemma," ISS Working Papers - General Series 629, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    10. Fernando Rugitsky, 2017. "The rise and fall of the Brazilian economy (2004-2015): the economic antimiracle," Working Papers, Department of Economics 2017_29, University of São Paulo (FEA-USP).
    11. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    12. Bresser-Pereira, Luiz Carlos, 2017. "The economics and the political economy of new-developmentalism," Textos para discussão 464, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    13. Sergio Parrinello, 2014. "A search for distinctive features of demand-led growth models," PSL Quarterly Review, Economia civile, vol. 67(270), pages 309-342.
    14. Grossman, Gene M & Helpman, Elhanan, 1995. "The Politics of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 85(4), pages 667-690, September.
    15. Schritt Jannik, 2016. "The petro-political configuration: entanglements of Western and Chinese oil zones in Niger," ZFW – Advances in Economic Geography, De Gruyter, vol. 60(1-2), pages 40-56, June.
    16. Jan Fagerberg & Martin Srholec, 2017. "Global Dynamics, Capabilities and the Crisis," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 83-106, Springer.
    17. Vos, Rob & Frenkel, Roberto & Ocampo, José Antonio & Palma, José Gabriel & Marfán, Manuel & Ros, Jaime & Taylor, Lance & Correa, Nelson & Cimoli, Mario, 2005. "Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability," IDB Publications (Books), Inter-American Development Bank, number 347, December.
    18. Juan Alberto Vázquez-Muñoz, 2018. "La acumulación de capital como un determinante de la tasa de crecimiento de la ley de Thirlwall," Contaduría y Administración, Accounting and Management, vol. 63(3), pages 13-14, Julio-Sep.
    19. Jiménez, Valeria, 2020. "Wage shares and demand regimes in Central America: An empirical analysis for Costa Rica, El Salvador, Honduras, Nicaragua, and Panama, 1970-2016," IPE Working Papers 151/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    20. Samuel, Sajay & Manassian, Armond, 2011. "The rise and coming fall of international accounting research," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(6), pages 608-627.

    More about this item

    Keywords

    Exchange rate; Industrial policy; Protectionism; East Asian countries;
    All these keywords.

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:42:y:2018:i:3:p:617-632.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/cje .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.