Endogenous supply side constraints to export-led growth and aggregate growth implications in transition economies

Trond-Arne Borgersen and Roswitha M. King

Structural Change and Economic Dynamics, 2015, vol. 33, issue C, 96-109

Abstract: This paper analyses the endogenous limits to export-led growth inherent in an economy's supply side. The supply side determination of export growth relates it, as well as the cross-sectoral subsidy, to the economy's industrial structure and difference in productivity growth between sectors. Starting off from fixed sector sizes we endogenise the relation between sector sizes and the productivity growth differential and highlight an economy's structural flexibility. We also highlight the differing implications for the economy from whether a widening productivity growth gap is due to higher productivity growth in the tradable sector or lower productivity growth in the non-tradable sector. When analyzing a transition economy's ability to transform differences in productivity growth into aggregate growth we find a highly context specific relation. We show how transition might be characterized by aggregate growth exceeding tradable sector productivity growth or vice versa depending on the combination between industrial structure, the prevailing incentives for structural change and the ability to take advantage of such incentives. We identify tipping points for endogenous phase shifts where aggregate growth changes from accelerating to diminishing growth and vice versa.

Keywords: Aggregate growth; Productivity growth differential; Transition; Economic structure; Structural dynamics (search for similar items in EconPapers)
JEL-codes: O41 O43 P51 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:33:y:2015:i:c:p:96-109

DOI: 10.1016/j.strueco.2015.04.002

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