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The purpose of this paper is to contribute to the literature on demand-driven Keynesian growth in open economies by developing a formal model that combines Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model into a more general specification. Then, based on the model developed in this paper, the authors analyse more broadly some important issues concerning the net impact of currency depreciation on the short-run growth.

The authors build upon Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model in order to develop the theoretical framework. The authors also run numerical simulations to illustrate the net impact of devaluation on the short-run growth rate in different scenarios.

The authors demonstrate that the net impact of currency devaluation on growth can go either way, depending on some structural conditions such as the average share of imported intermediate inputs in prime costs of domestic firms and the institutional capacity of trade unions to set nominal wages through the bargaining process. The model also shows that the effectiveness of a competitive real exchange rate to promote growth is higher in countries where the share of labour in domestic income is also higher.

This paper provides a coherent formal starting-point for further theoretical developments on the interrelatedness between currency devaluation, income distribution and growth. These findings provide empirically testable hypothesis for future research.

The present study proposes an alternative formal solution for the theoretical problem of imposing a balance-of-payments constraint on the process of cumulative causation often incorporated in Kaldorian growth models. In terms of policy, the framework sheds further light on the relevance of income distribution and the labour market institutional framework for the dynamics of the exchange rate pass-through mechanism and allows us to map out related conditions under which currency devaluation can promote growth.

The aim of this paper is to contribute to the literature on balance‐of‐payments‐constrained growth by providing an innovative empirical evaluation of a disaggregated version of the so‐called Thirlwall's Law derived from a Pasinettian multisectoral framework.

After estimating sectoral elasticities of exports and imports for a considerable panel dataset of 90 countries over the period 1965‐1999, the authors have performed two empirical exercises. First, they grouped countries together by income level and evaluated a multisectoral balance‐of‐payments‐constrained growth model by analyzing prediction errors and mean absolute deviations. Second, the authors carried out a regression validity test on the results.

The main findings give support to the validity of the multisectoral version of Thirlwall's Law, providing therefore further understanding of the structural determinants of the uneven international development and guidance for the design of growth‐enhancing national structural policies.

The main value added of this contribution to the existing literature lies in the use of disaggregated trade data in conjunction with modern panel data econometric techniques to obtain empirical estimates on the balance‐of‐payments constraints to long‐run economic growth for an unprecedently large sample of countries.

The purpose of this paper is to study the impact of the real exchange rate on investment in the Brazilian manufacturing industry.

The authors develop an investment model that considers the effect of changes in the real exchange rate, taking into account that the effect of the real exchange rate on the Brazilian manufacturing investment operates through demand and cost channels. The composition of these effects varies across manufacturing sectors, with different repercussions on investment decisions, depending on sectoral characteristics. A panel data analysis is applied to estimate the model for the Brazilian manufacturing sectors from 1996 to 2010.

One main result is that the responsiveness of the Brazilian manufacturing investment to real exchange rate varies considerably across manufacturing sectors. Overall, the results contribute to a better understanding of the relationship between exchange rate dynamics, manufacturing investment and industrial development, thus unveiling important empirical elements for the debate on industrial policies to stimulate manufacturing investment and production.

As the (scant) empirical literature on real exchange rate and investment in Brazil has invariably been using aggregate data, this paper contributes to the literature by obtaining sectoral estimates of the responsiveness of manufacturing investment to exchange rate fluctuations that further the understanding of the complex relationship between these economic variables.

This article provides a detailed investigation of how Lewis revisited classical and Marxian concepts such as productive/unproductive labor, economic surplus, subsistence wages, reserve army, and capital accumulation in his investigation of economic development. The Lewis 1954 development model is compared to other models advanced at the time by Harrod, Domar, Swan, Kaldor, Solow, von Neumann, Nurkse, Rosenstein-Rodan, Myint, and others. Lewis applied the notion of economic duality to open and closed economies.