Choosing sides in the trilemma: international financial cycles and structural change in developing economies |
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| Authors: | Mario Cimoli Jose Antonio Ocampo Gabriel Porcile Nunzia Saporito |
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| Institution: | 1. Economic Commission for Latin America and the Caribbean (ECLAC), Santiago, Chile;2. Department of Economics, University of Venice, Venice, Italy mario.cimoli@cepal.org;4. School of International and Public Affairs, Columbia University, New York, NY, USA;5. Department of Economics, Federal University of Parana (UFPR), Curitiba, Brazil;6. Economic Commission for Latin America and the Caribbean (ECLAC), Santiago, Chile |
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| Abstract: | ABSTRACT This paper analyzes the impact of international financial cycles on structural change in developing economies. It is argued that the impact of these cycles depends on the specific combination of macroeconomic and industrial policies adopted by the developing economy. The cases of Brazil and Argentina are contrasted with those of Korea and China. In the Asian economies, macroeconomic policy has been a complementary tool along with industrial policy to foster the diversification of production and capabilities. Inversely, in the case of the Latin American countries, long periods of real exchange rate (RER) appreciation, combined with the weaknesses (or absence) of industrial policies, contributed to the loss of capabilities and lagging behind. |
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| Keywords: | Real exchange rate economic growth industrial policy |
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