(DP 1985-14) The Distributive Implications of Export-Led Industrialization in a Developing Economy

Abstract

This paper uses a Kaleckian model to study the effects of export expansion on income distribution given particular "structural defects" and institutional constraints in a developing economy. The results show that there might be negative impacts on income distribution if the following conditions holds: 1) The bulk of export receipts goes to the payment of imported inputs and capital goods; 2) There are weak productive capacities and bottlenecks to the production of home consumption goods; 3) The export sector is an "enclave" making it difficult for resources to flow from exports goods to home consumption goods and vice-versa; 4) There are institutional factors that prevent the rise of real wages. In such an economy, exports are vital for the reproduction of the system. The solutions to the deleterious effects on income distribution would lie in correcting the "structural defects" rather than export contraction.