Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5053623 | Economic Modelling | 2016 | 9 Pages |
Abstract
This paper presents a model of the conditions that may lead a small open economy towards a middle income trap. This situation has shown to be pervasive in Latin America. As Argentina is a salient instance of this phenomenon, we develop a stylized model of its economy at the first decades of the XXth century. It consists of a general equilibrium model of an open emerging economy, which is a price-taking primary goods exporter. A growth process is triggered by an increase of commodity prices, due to an upward jump of the world demand of these goods. The economy goes through several phases of growth, starting from a subsistence stage. Once decreasing returns set in, the economy reaches a steady state. Only a sustained high demand of its export products allows the economy to thrive. Otherwise, the economy gets entrapped in a middle income level.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Carlos Dabús, Fernando Tohmé, M. Ángeles Caraballo,