Growth models induced by demand t compatible with external restraint: the Kaldor inheritance

Abstract

Kaldor identified the growth of exports as necessary condition to establish a virtuous circle of economic growth. Thirlwall deepened Kaldor’s propositions identifying the balance of payments equilibrium as the condition to a stable growth path. In developing countries Thirlwall, following Kaldor, observed that the investment on technological increment of the basket of export products – implying structural change that would increase external competitiveness – can raise the balance of payments equilibrium growth rate. Given Kaldor’s seminal propositions, this article proposes an analytical revision from his growth models, as well as the extensions proposed by his followers, since the export-led growth model till latter formulations considering the external indebtedness. I conclude showing that is Kaldor’s original formulations that assure a long run growth path equilibrium.