An econometric investigation of North-South interdependence

M. Beenstock

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

The construction of an empirical model is preferable to the alternative "oracular' approach, whereby a (usually complex) theoretical model is constructed and its parameters given a priori values. In contrast to models designed to study North-North interdependence, this does not attempt to distinguish regions or categories within the broad groups "North' and "South'. Tentative conclusions are advanced; the estimates suggest that the strongest influences in the model run from North to South rather than vice-versa. In particular, the South appears to benefit from an expansion of aggregate demand in the North, in part due to the commodity price increases caused by the higher demand for Southern commodities as Northern production increases. Spillover effects in the opposite direction, from higher Southern aggregate demand and imports onto Northern economic activity, are small in magnitude. Capital and aid flows from the North to the South, may bring the "Dutch disease' to the South through an appreciation of its exchange rate and a resulting squeeze on the tradable goods sector. There is a comment by Michael P. Dooley. -after Author

Original languageEnglish
Pages (from-to)32-64
Number of pages33
JournalUnknown Journal
StatePublished - 1988

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