Growth strategies for selected Latin America and East Asian countries between 1970-2019: revisiting Thirlwall’s Law

Abstract

This paper analyzes the growth process of selected countries in East Asia and Latin America, between 1970 and 2019, in the light of Thirlwall's (1979) model, according to which the more a country diversifies exports with goods with high income-elasticity of demand, the lesser the long-term external constraint. Through an econometric analysis of time series, the income-elasticity of demand for exports and imports and the growth rate compatible with the balance of payments balance were estimated. The results obtained suggested success in East Asia, which achieved robust growth, while the opposite was observed in Latin America.