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A 'Generalised' Version of the Balance-of-Payments Growth Model: An application to neighbouring regions

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  • Kevin Nell

Abstract

This paper applies a 'generalised' version of Thirlwall's balance-of-payments (BOP) constrained growth model by testing for long-run relationships between the output growth rates of OECD countries and two neighbouring regions; South Africa (SA) and the rest of the Southern African Development Community (RSADC). The empirical results find strong support for the 'generalised' BOP growth model, which stresses the mutual interdependence of the world economy where one country's growth rate depends on others'. Although the policy implications are not mutually exclusive, they may be viewed from the individual perspectives of SA and RSADC. SA is only BOP constrained with respect to OECD. The message to SA's policy makers is that faster growth rates may be the result of an improvement in the structural demand features of its exports to OECD. RSADC is only BOP constrained with respect to SA. Growth-promoting policies in SA may have a high and positive impact on the whole SADC region. Policy-makers in RSADC, however, are advised to reduce their dependence on SA by improving the structural demand features of their exports to OECD.

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  • Kevin Nell, 2003. "A 'Generalised' Version of the Balance-of-Payments Growth Model: An application to neighbouring regions," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 249-267.
    • Handle: RePEc:taf:irapec:v:17:y:2003:i:3:p:249-267
    DOI: 10.1080/0269217032000090478
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    Cited by:

    1. Hiroshi Nishi, 2014. "A Multi-Sectoral Balance-of-Payments-Constrained Growth Model with Sectoral Heterogeneity:International Competition, Productivity Dynamics, and Economic Growth," Discussion papers e-13-005, Graduate School of Economics Project Center, Kyoto University.
    2. Mark Setterfield & Selen Ozcelik, 2017. "Is the balance of payments constrained growth rate time-varying? Exchange rate over valuation, policy-induced recessions, deindustrialization, and long run growth," Working Papers 1726, New School for Social Research, Department of Economics.
    3. 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.
    4. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.
    5. Civcir, Irfan & Panshak, Yohanna & Ozdeser, Huseyin, 2021. "A multi-sectoral balance of payments constrained growth approach with intermediate imports: The case of Nigeria," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 240-250.
    6. Dávila-Fernández, Marwil J. & Oreiro, José L. & Dávila Dávila, Mario W., 2018. "Endogenizing non-price competitiveness in a BoPC growth model with capital accumulation," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 77-87.
    7. Garcimartin, Carlos & Kvedaras, Virmantas & Rivas, Luis, 2016. "Business cycles in a balance-of-payments constrained growth framework," Economic Modelling, Elsevier, vol. 57(C), pages 120-132.
    8. F.N. Chimphamba & M.K. Wilson, 2022. "The balance-of-payments-constrained growth model for Malawi: Evidence from the bounds testing approach," Journal of Economic Policy and Management Issues, JEPMI, vol. 1(1), pages 50-61.
    9. Kevin S. Nell, 2006. "Structural Change And Nonlinearities In A Phillips Curve Model For South Africa," Contemporary Economic Policy, Western Economic Association International, vol. 24(4), pages 600-617, October.
    10. Guilherme R. Magacho & John Mccombie, 2016. "Impacts Of Developing Countries Growth On Natural Resource Exporters: A Bop Constrained Growth Model," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 097, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Alex Luiz Ferreira, 2007. "On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(1), pages 43-54.
    12. Nishi, Hiroshi, 2016. "A multi-sectoral balance-of-payments-constrained growth model with sectoral heterogeneity," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 31-45.
    13. Andrew B. Trigg, 2020. "Thirlwall’s Law and uneven development under Global Value Chains: a multi-country input–output approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-22, December.
    14. Leon Podkaminer, 2017. "“Thirlwall’s Law” reconsidered," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(1), pages 29-57, February.

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