Growth and Stagnation in Developing Economies: a Structural Approach

During the 2000s, after almost two decades of poor growth performance, Latin American countries have experienced a period of growth acceleration. Even though it has been led mainly by a faster growth of external demand for natural resources, this demand has increased national income, and, by increasing wages and investment, it has recovered domestic markets. Nonetheless, even in face of a more diversified demand, Latin American countries have specialised in the production and exports of less technologically advanced goods, increasing the asymmetry between the structures of demand and supply. This dynamics contrasted with the pattern followed by East Asian developing economies, where the strategy of development for production and trade has focused on technological upgrading. As the demand for high-tech manufacturing has increased, these countries have sophisticated their structure of production and promoted exports of high-tech goods. With the aim of analysing the long-term consequences of these different patterns of production and trade specialisation, this study considers a Kaldorian approach, in which growth is demand driven and strictly related to sectoral specifities. Based on this perspective, it seeks to identify which sectors are capable of promoting higher longterm growth rates and the mechanisms through by this process take place. The study shows that specialisation in sectors with both high dynamic increasing returns and high income elasticities can trigger a cumulative causation growth process. Additionally, countries' structures of production and trade are analysed through input-output methods to assess to what extent the Latin American growth pattern is sustainable in the long run. The impacts of countries' trade liberalisation and the effects of their integration into global supply chains is compared across countries with the aim of evaluating which ones that are benefiting the most from these changes in commercial structure and which are losing sectors crucial to promote high and sustained growth rates.CAPES-Cambridge Overseas Trus

Supply and demand in Kaldorian growth models: a proposal for dynamic adjustment

This paper analyses the dynamic adjustment of supply and demand in Kaldorian growth models. We aim at discussing how the growth rate of a country, given by demand constraints, adjust towards the growth rate given by the supply-side, and vice-versa, presenting the necessary conditions for those adjustments. Our main conclusion is that if there are no capital constraints, firms invest to maintain a constant desired level of capital utilization. Depending on specific conditions, however, an economy may face labour constraints, which would require an adjustment mechanism on employment. The Palley-Setterfield approach brings a possible reconciliation to supply- and demand- long-term growth rates. However, we must raise some considerations about the labour market in order to understand the characteristics of this approach. We draw from the critique by McCombie, in which employment adjusts immediately to guarantee equilibrium between supply and demand. We propose reconciliation between the Palley-Setterfield and the McCombie approaches, presenting a model focused in a labour market adjustment, in which both types of adjustments represent extreme cases, discussing the existence and the characteristics of intermediate cases

Capital goods industry in Brazil : external constraint and technological dependence in the recent growth cycle

Orientador: Mariano Francisco LaplaneDissertação (mestrado) - Universidade Estadual de Campinas, Instituto de EconomiaResumo: Este trabalho tem por objetivo investigar o desempenho da indústria de bens de capital no ciclo de expansão da economia brasileira, que se estendeu entre 2004 e 2008, destacando suas consequências para o crescimento e para o desenvolvimento econômico do país. Pretende-se analisar, para isso, o quanto a indústria de bens de capital foi importante para o processo de industrialização brasileira no século XX e como as transformações pelas quais esta economia passou foram capazes de modificar a estrutura do setor de máquinas e equipamentos. Tendo em vista as restrições que podem advir da reestruturação produtiva que o país passou nesse período, com destaque para as insuficiências da indústria de bens de capital em suprir a demanda dos setores em crescimento, este trabalho indagará a possibilidade de continuidade desse ciclo de expansão e sua capacidade de se traduzir em desenvolvimento econômico. Para tanto, buscar-se-á avaliar a importância da internalização desse setor tanto para evitar restrições externas ao crescimento, quanto para a geração, absorção e difusão do progresso técnicoAbstract: This text aims to investigate the performance of the capital goods industry in the Brazilian economy's recent expansion cycle, which lasted from 2004 to 2008, emphasizing its implications to the country's growth and economic development. For this purpose, it intends to analyze to what extent the capital goods industry was important to the Brazilian industrialization process in the twentieth century and how the transformations through which such economy has passed were able to modify the machinery sector's structure. Considering the constrains the country might have faced as a result of the productive restructuring during this period, with focus on the capital goods industry's insufficiency in supplying the growing sector's demand, this work questions whether the continuity of such cycle of expansion is possible and its capacity to result in economic development. Therefore, this study seeks to measure both the importance of the internalization of this sector to avoid external constraints and its importance for generation, absorption and diffusion of technical progressMestradoCiências EconomicasMestre em Ciências Econômica

Impacts of Trade liberalization on Countries' Sectoral Structure of Production andTrade: A Structural Decomposition Analysis

This study extends structural decomposition analysis (SDA) to consider the substitution between domestic and imported inputs. The approach provides a detailed investigation of the consequences on economic growth following changes in countries’ supply chains. We apply the method to data from Brazil and other countries. The results suggest that the substitution of imported for national inputs is a key factor in SDA, assuming that the impact of technological change is underestimated if this substitution is not taken into account. The findings also show that the substitution of imported inputs is essential to understanding the Brazilian growth path in the 2000s. The positive impact of export growth on total output was offset by the increase in imported inputs, especially in highly technological sectors. The results in Brazil stand in contrast with those in Korea, China, and Germany, where high-tech sectors benefited the most from the substitution.Coordenac¸ ão de Aperfeic¸ oamento de Pessoalde Nível Superior (CAPES) and Cambridge Overseas Trust (COT) financed G Magacho for his Ph.D. studies during the period that this paper was develope

The New Development Bank (ndb) as a mission-oriented institution for just ecological transitions : a case study approach to BRICS sustainable infrastructure investment

The New Development Bank (NDB) has not yet received the attention it deserves in the development community. On the one hand, this lack of attention could be partially explained by its short existence. On the other hand, in its first five years of operations, the bank consolidated itself as a source of development financing in the bloc, claiming originality in the traditional business model of multilateral development banks. In this sense, the research gap on the bank points to a lack of communication between the NDB's claims to originality and its communication with the community involved in development debates. Addressing what is “new to NDB” to consolidate it as a full member of the community, this article analyzes the bank's first operations to understand NDB's possibilities of positioning itself as a mission-oriented institution to finance the ecological transition in the Brics countries by through partnerships with local actors and institutions committed to the notion of public value. To understand these opportunities, this article sheds light on five selected NDB projects and their engagement with local sustainable development agendas. Studying together, the case studies provide important lessons about the bank's approach to achieving originality, but they are not intended to evaluate the entirety of its first five years of operations – which should be addressed by further research. The article concludes by suggesting a mission roadmap for the bank to consider in its corporate strategy. This implies a shift in perspective from its current narrow focus on investment in sustainable infrastructure, towards partnerships with local actors in the BRICS development community. This requires a strong shared commitment to the notions of sustainability and public value by connecting bank operations and country-specific challenges to the ecological transition

Structural change and economic growth: Advances and limitations of Kaldorian growth model

Many different approaches have addressed the issue of why were some developing countries able to reduce the income gap with developed economies while others were not. However, few approaches take into account the process of structural change. This paper reviews the theoretical basis of the Kaldorian approach for the relationship between structural change and countries’ long-term economic growth, emphasising its recent developments and its limitations. According to Kaldor, structural change towards specific sectors continuously increases countries’ growth rates through a cumulative causation process. Although he had stressed it exhaustively, only recently Kaldorian models have explicitly incorporated this feature. Nevertheless, these models still face significant limitations to show how a cumulative causation process takes place in an open economy. The paper discusses the most relevant such limitations, and suggests options for future directions. JEL codes: 041, E12, F4

Brazil: capital goods industry during the 2003-2008 boom and following the global crisis

The capital goods industry is essential for technological development and long-term economic growth without external restrictions. After a long period of stagnation, investment growth resumed in Brazil in 2003 and brought renewed vigor to the capital goods industry. Nevertheless, the industry is very diverse, and some sectors have failed to meet rising demand where others have succeeded, namely those with high technological potential such as suppliers of machinery for the oil, mining and construction industries and makers of transportation and electrical generation and distribution equipment. Those sectors continued to expand even in the wake of the 2008 global crisis and have been barely touched by foreign competition

Brasil: dinámica de la industria de bienes de capital en el ciclo de expansivo 2003-2008 y tras la crisis mundial

La industria de bienes de capital es esencial para el desarrollo tecnológico y para garantizar un crecimiento económico a largo plazo sin restricciones externas. En el Brasil, después de un largo período de estancamiento, las inversiones volvieron a crecer a partir de 2003, dando nuevo impulso a la industria de bienes de capital. Sin embargo, se trata de una industria bastante heterogénea; mientras que en algunos sectores no se logró cubrir la expansión de la demanda, esto fue posible en otros que evidenciaron un elevado potencial tecnológico, como los proveedores de máquinas para las industrias del petróleo, la minería y la construcción, y los fabricantes de equipos de transporte y de generación y distribución de energía eléctrica. Esos sectores continuaron expandiéndose incluso en el período posterior a la crisis mundial de 2008 y casi no fueron afectados por la competencia internacional

Supply and demand in Kaldorian growth models: a proposal for dynamic adjustment

This paper analyses the dynamic adjustment of supply and demand in Kaldorian growth models. We discuss how the growth rate of a country, given by demand constraints, adjusts towards the growth rate given by the supply-side, and vice-versa, presenting the necessary conditions and empirical plausibility for these adjustments. The Palley-Setterfield approach brings a possible reconciliation to supply- and demand- long-term growth rates. However, this approach have some important empirical drawbacks, and we raise many considerations about the labour market in order to capture their analysis in a common framework. In this sense, we draw from the criticism developed by McCombie, and synthetize his view in terms of complete endogeneity, in a way in which employment adjusts immediately to guarantee equilibrium between supply and demand. The main contribution of the paper is to propose a theoretical reconciliation between the Palley-Setterfield and the McCombie approaches, presenting an initially simple model focused in a labour market adjustment, in which both types of adjustments represent extreme cases. We also discuss the theoretical possibility and the characteristics of hysteresis effects that lead to intermediate cases