Causes of the Slow Rate of Economic Growth in the UK

The Essential Kaldor 01/1966;
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    • "When manufactured goods with higher technological content are part of the exports basket, the increase in the latter will also result in increasing returns to scale, production linkages, increased productivity, the generation of externalities through the dissemination of knowledge and technology (given the need to adapt to international production standards), and finally, a virtuous circle of growth that allows developing countries to 'catch up' (Blecker and Razmi, 2010; Hausmann et al., 2006; Hausmann and Hidalgo, 2014; Hirschman, 1958; Kaldor, 1966). "
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    ABSTRACT: In this article, we analyse the hypothesis suggesting that structural changes (oriented towards manufacturing and related services) – measured through variations in the income elasticities of a country's demands for exports and imports – are influenced by the difference between the observed real effective exchange rate and industrial equilibrium. The industrial equilibrium exchange rate is defined as the exchange rate level that equalises real unit labour costs between local producers of manufactured goods and their trading partners. To test the hypothesis in question, a sample comprising data from 64 countries for the 1995-2012 period was built. First, the effective industrial equilibrium exchange rate was calculated for these countries, in addition to the observed effective real exchange rates for each year; then, income elasticities were estimated for each country in this period. A dynamic panel data econometric model was adopted to estimate the relationship between these elasticities and the difference between the observed effective real exchange rates and the industrial equilibrium rate. The control variables included the manufactured share in value added, the exports of manufactured goods, and the current account balance. The results show a positive relationship between the dependent and independent variables, which confirms our hypothesis.
    Full-text · Conference Paper · Oct 2015
    • "The Kaldor-Verdoorn Law in itself does not provide any explanation on the mechanisms underlying technical change or the existence of these increasing returns. The theoretical foundations brought to the Kaldor-Verdoorn Law by Kaldor (1966) remained verbal. Only few formal attempted micro-foundations of the law can be found in the literature. "
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    ABSTRACT: This paper proposes to analyse the micro-level sources for productivity gains at an aggre-gated level. The paper reverts to a micro-founded model of technological change in-line with the evolutionary literature. The data generated through numerical simulations are used to identify the sources of increasing returns as measured by the Kaldor-Verdoorn Law. In this respect we also aim to provide some plausible micro-foundations for this macro-economic law. The paper shows that: (i) Dynamic increasing returns appear as an emergent property of the model; (ii) micro-characteristics of technical change, as the amplitude and the frequency of changes, as well as selection mechanisms significantly shape these increasing returns.
    No preview · Chapter · Sep 2015
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    • "The process of economic growth Kaldor (1966) suggested that it is the manufacturing sector, which plays the role of engine of growth, as the potential for productivity growth is highest in this sector. However, in the context of the developing countries the importance of the tertiary sector in pulling the overall growth has acquired prominence. "

    Full-text · Article · Aug 2015 · International Journal of Business and Management
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