Template-type: ReDif-Paper 1.0 
Author-Name: Porcile, Gabriel
Author-Email: porcile@cepal.org
Author-workplace-name: Economic Commission for Latin America and the Caribbean (ECLAC)
	 and Federal University of Parana (UFPR), Brazil
Author-Name: Sartorello Spinola, Danilo
Author-Email: sartorello@merit.unu.edu.
Author-workplace-name: UNU-MERIT, Maastricht University
Title: Natural, effective and BOP-constrained rates of growth: Adjustment mechanisms and
	 closure equations
Abstract: The interaction between the effective (yE) and the natural rates of 
	 growth (yN) is a central part-implicitly or explicitly addressed-in all 
	 growth models. A stable equilibrium requires these two rates to 
	 converge; otherwise, one or more key macroeconomic variables would be 
	 rising or falling without bounds. In addition, the Keynesian tradition 
	 stressed the key role of the Balance-of-Payments constraint as a 
	 determinant of the equilibrium growth rate in the long run (yBP). This 
	 paper discusses alternative mechanisms through which these three growth 
	 rates converge and relates them to different theoretical approaches to 
	 the determinants of growth. With this objective, we extend the model 
	 suggested by Setterfield (2010) to include the evolution of the 
	 North-South technology gap and the pattern of specialisation as key 
	 components of the Kaldorian productivity regime. The importance of the 
	 National System of Innovation in shaping the learning parameters and 
	 outcomes of the model is stressed, drawing from the Schumpeterian 
	 literature. A successful development strategy may emerge when the NSI 
	 enhances indigenous technological capabilities that allow the South 
	 economy to catch-up with the technological frontier.
Keywords: BOP-constrained growth models, Growth Models, Structural Change,
	 Technological Capabilities
Classification-JEL: E12, F43, O30
Series: UNU-MERIT Working Papers
Creation-Date: 20180116
Number: 2018-003
File-URL: https://unu-merit.nl/publications/wppdf/2018/wp2018-003.pdf
File-Format: application/pdf
File-Size: 275 kb
Handle: RePEc:unm:unumer:2018003