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Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis

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  • Jonathan Perraton

Abstract

Thirlwall's hypothesis of balance of payments constrained growth has been widely tested for developed countries, but much less for developing countries. Further, previous tests have used dated estimates derived using non-robust econometric techniques. After discussing the conditions under which Thirlwall's hypothesis would be valid and the econometric issues involved, this study reports error correction estimates of import and export demand functions for a large sample of developing countries. Deriving the long run income elasticities of demand from these functions, the study reports tests for different specifications of Thirlwall's hypothesis on this sample and finds some support for it.

Suggested Citation

  • Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
    • Handle: RePEc:taf:irapec:v:17:y:2003:i:1:p:1-22
    DOI: 10.1080/713673169
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    References listed on IDEAS

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    1. J. S. L. McCombie & A. P. Thirlwall, 1994. "Economic Growth and the Balance-of-Payments Constraint," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-23121-8, October.
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