João Prates Romero

The Multi-Sectoral Thirlwall’s Law: evidence from 14 developed European countries using product-level data

The paper reports estimates of import and export functions for five technological sectors in 14 developed European countries. These functions have never before been estimated for developed countries adopting a technological classification of sectors. The paper compares estimates of income elasticities found using vector error-correction models employing aggregate deflators, with estimates found using cross-product panels employing product-specific quality-adjusted price indexes recently calculated by Feenstra and Romalis. The results indicate that the income elasticities of imports and exports are higher for medium- and high-tech manufactures, which suggests the importance of moving from the production of simple goods to the production of goods with high technological content. The estimates also suggest that the Multi-Sectoral Thirlwall’s Law holds for the countries analysed, while comparing the estimates revealed that cross-product panels with quality-adjusted prices generate considerably more robust results. The investigation reveals that using a more recent time period generates estimates of income elasticities of demand for primary products and resource-based manufactures that tend to be higher than the estimates found by studies that have used longer time periods, while the opposite holds for low-, medium-, and high-tech manufactures.

Differences in increasing returns between technological sectors: A panel data investigation using the EU KLEMS database

The authors would like to thank Dr. Marta Spreafico and two anonymous referees for their helpful comments. The usual disclaimer applies. Financial support from the Coordination for the Improvement of Higher Education Personnel (CAPES-Brazil), process number 0257-11-7, is gratefully acknowledged.

Thirlwall's law and the specification of export and import functions

The contribution of this paper is threefold. First, it proposes general specifications for export and import functions that encompass the contributions of both Kaldorian and Schumpeterian literatures on the determinants of trade performance. Second, the paper provides evidence of the impact of nonprice competitiveness, measured by the growth of relative economic efficiency on export and import growth in different technological sectors. Third, it shows that the magnitude of income elasticities of demand is partially determined by relative economic efficiency.

Sophistication, Productivity and Trade: A Sectoral Investigation

Joao P. Romero and Gustavo Britto in this chapter, titled ‘Sophistication, Productivity and Trade: A Sectoral Investigation’, argue that in balance-of-payments-constrained growth models, income elasticities of exports and imports are the crucial parameters determining the long-term growth rate. Consequently, it is critical to understand what determines the level of these elasticities. The chapter investigates whether measures of productive sophistication developed by Hausmann et al. (J Econ Growth 12(1): 1–25, 2007) and Hidalgo and Hausmann (Proc Natl Acad Sci USA 106(26): 10570–10575, 2009) can explain not only productivity growth but also the size of income elasticities of trade in different technological sectors. It does so by testing the impact of initial industry sophistication on subsequent productivity growth for low- and high-tech industries as well as by assessing if changes in industry sophistication are associated with higher exports and imports in these sectors. The empirical investigation uses product-level trade data from UN Comtrade, combined with price data from Feenstra and Romalis (Q J Econ 129(2): 477–527, 2014) and with productivity data from EU KLEMS for 13 industries from seven countries, over the period 1984–2007.