Abstract

Commodity dependence is a long-lasting feature of South American economies,
with far reaching effects in economic and social performance. This paper focuses in the interaction
between commodity prices and real exchange rate and in its effects on productive capabilities.
New-Developmentalist approach has labeled that situation as a “Dutch-Disease”. I
propose a Balance of Payment Constraint Growth model especially designed to address some
specificities of commodity dependence that allow to theoretically analyze this issue. Empirical
tests are conducted for the period 1970-2017. It is found that price surges are damaging for
productive capabilities only in the context of the dismantling of state intervention.

JEL Classification: C23; E12; 011.