A formal assessment of new-developmentalist theory and policy

Vol. 38 No. 3 (2018)

Jul-Sep / 2018
Published February 26, 2020
PDF-English
PDF-English

How to Cite

Dvoskin, Ariel, and Germán David Feldman. 2018. “A Formal Assessment of New-Developmentalist Theory and Policy”. Brazilian Journal of Political Economy 38 (3):395-413. https://doi.org/10.1590/0101-3157-2018-2892.

A formal assessment of new-developmentalist theory and policy

Ariel Dvoskin
CONICET/Institute for High Social Studies (IDAES), National University of General San Martín (UNSAM), Argentina.
Germán David Feldman
CONICET/Institute for High Social Studies (IDAES), National University of General San Martín (UNSAM), Argentina.
Brazilian Journal of Political Economy, Vol. 38 No. 3 (2018), Jul-Sep / 2018, Pages 395-413

Abstract

We develop a formal framework that endogeneizes the productive structure of a small open peripheral economy as the outcome of a problem of technical choices. We subsequently examine the main theoretical theses and policy prescriptions of the New-Developmentalist approach to economic growth. We argue that: a) not only does the pattern of specialization depend on technical conditions, but also on income distribution; b) in an economy without rents, the level of the money wage-nominal exchange rate ratio is univocally determined once the rate of profits is known, and shows an inverse relationship with it; c) if differential rents are considered, the level of the rate of profits can be set independently of the money wage-exchange rate ratio; d) the level of the exchange rate that ensures normal profitability of the primary sector need not coincide with the current-account equilibrium rate; e) the effective exchange rate need not gravitate around any of these two former levels, which must be rather seen as minimum thresholds of the effective rate; e) the unpleasant distributive consequences of exchange-rate depreciation can be partially avoided by means of export duties that do not raise primary-commodities production costs. 

JEL Classification: B22; E11; F43.


Keywords: distributive conflict Dutch Disease exchange rate policy newdevelopmentalism pattern of specialization