ECONOMIC GROWTH AND THIRLWALL'S LAW: AN ANALYSIS FOR LATIN AMERICAN ECONOMIES

Abstract

The objective is to demonstrate, using the Engle-Granger methodology, the five selected Latin American countries (Argentina, Brazil, Chile, Colombia and Mexico) actually observed for the period 1980-2005, a variation in its income elasticity of imports so that it tends to soften the constraint imposed by the law of Thirlwall growth of these countries, ie, it is expected that a negative flow of capital, or a flight of capital, reduce the income elasticity of imports, implying a higher growth rate than is possible if it is kept constant during this flight. The results show that Thirlwall's Law seems to be a good representation for the trajectory of growth, which is determined primarily by exports and the income elasticity of imports.