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Endogenizing non-price competitiveness in a BoPC growth model with capital accumulation

Marwil Dávila-Fernández, José Luís Oreiro () and Mario W. Dávila Dávila

Structural Change and Economic Dynamics, 2018, vol. 44, issue C, 77-87

Abstract: On a theoretical level this article revisits Thirlwall's rule (or law) proposing a new channel through which it is possible to endogenize non-price competitiveness in the BoPC framework. We develop a model that formalizes the inverted-U relationship hypothesis that non-price competitiveness rises as countries move from a primary productive structure to light manufacturers and then decreases as richer countries get locked into antiquated industrial structures. We name it the stratification mechanism. Finally we incorporate the supply side of the economy into the structure of the model in order to avoid the so called inconsistency problem.

Keywords: Growth; Balance-of-Payments Constraint; Thirlwall's law (search for similar items in EconPapers)
JEL-codes: O10 O11 O40 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.strueco.2017.10.006

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