Analyzing the Role of Capital Accumulation in Determining the Growth Rate according to Thirlwall's Law

Abstract

In this article, an extension of the external restriction to growth model is developed through the incorporation of the rate of capital accumulation and the growth rate of capital productivity as determinants of the growth rate of imports in a first version, and the growth rates of imports and exports in a second version. In the first version it is argued that, in addition to the growth rate of exports, capital accumulation and the growth rate of capital productivity determine the growth rate consistent with the dynamic equilibrium of the trade balance. The effect of capital accumulation can be positive, null or negative depending on whether the import requirements to generate capital accumulation are less, equal or greater than the import substitution that is generated through the modification of the productive structure. of the economy. Likewise, if the growth rate of capital productivity is partly exogenous and partly endogenous to capital accumulation, the latter can affect the long-term growth rate both directly and indirectly through its effect on the productivity of capital. The second version shows that international differences in growth rates are not only due to international specialization patterns, but also to international disparities in capital accumulation rates.