Operationalizing growth models

Lucio Baccaro and Sinisa Hadziabdic

No 22/6, MPIfG Discussion Paper from Max Planck Institute for the Study of Societies

Abstract: We present a new methodology for operationalizing growth models based on import-adjusted demand components. Applying the methodology to the latest release of OECD Input-Output Tables, we calculate the growth contributions of consumption, investment, government expenditures, and exports for sixty-six countries in the periods 1995 to 2007 and 2009 to 2018 and identify the respective growth models. We find that most countries are export-led or domestic demand-led and that other forms of growth are rare. Our results corroborate previous classifications in comparative political economy but also differ from them in significant respects. Importantly, our classification improves on previous ones by covering not just the advanced capitalist economies but also Central and Eastern European and South-East Asian and Latin American countries. In a further step, we illustrate how the new indicators can be used to analyze the "drivers" of different types of growth. This examination reveals that there is a clear trade-off between consumption- and export-led growth in advanced Western economies in the period 1995 to 2007 and a dependence of export-led growth in these countries on real exchange rate devaluation in the same period, while export complexity is not a significant predictor of export-led growth.

Keywords: advanced economies; emerging economies; export-led growth; growth models; input-output tables; political economy; entwickelte Volkswirtschaften; exportorientiertes Wachstum; Input-Output-Tabellen; politische Ökonomie; Schwellenländer; Wachstumsmodelle (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-hme and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:mpifgd:226

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