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Thirlwall’s Law and uneven development under Global Value Chains: a multi-country input–output approach

Trigg, Andrew B. (2020). Thirlwall’s Law and uneven development under Global Value Chains: a multi-country input–output approach. Journal of Economic Structures, 9(1), article no. 4.

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DOI (Digital Object Identifier) Link: https://doi.org/10.1186/s40008-020-0178-7
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Abstract

A notable macroeconomic explanation of uneven development, with particular relevance to developing countries, has been the problem of balance of payments constraints, as captured by Thirlwall’s Law: where relative growth rates are explained by differences between income elasticities for exports and imports. Araujo and Lima have formulated a one-country multisectoral disaggregation of this hypothesis using a vertically integrated input–output framework, which is extended here in two main ways. First, international trade in intermediate inputs—the basis for Global Value Chains—is introduced; second, the model is extended to multiple countries. The main outcome of the paper is the development of a new multisectoral method for modelling balance of payments constraints: a Multi-Country Sectoral Thirlwall Law (MCSTL) under which key sector relationships are nested in intercountry trading relationships that encompass both intermediate and final goods. The identification of this input–output structure is developed in analytical stages, moving from a one-country vertically integrated system, to two, three and finally multi-country systems. In addition to its theoretical contribution to understanding the industrial structure of trade, an implication of this multi-country/multi-sector approach is that it can also be tested in future empirical work using the recently available World Input–Output Database of national tables.

Item Type: Journal Item
ISSN: 2193-2409
Academic Unit/School: Faculty of Arts and Social Sciences (FASS) > Social Sciences and Global Studies > Economics
Faculty of Arts and Social Sciences (FASS) > Social Sciences and Global Studies
Faculty of Arts and Social Sciences (FASS)
Item ID: 69582
Depositing User: ORO Import
Date Deposited: 02 Mar 2020 11:01
Last Modified: 24 Jun 2020 13:07
URI: http://oro.open.ac.uk/id/eprint/69582
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