Real exchange rate and economic complexity in a North-South structuralist BoPG model


  • Luciano Ferreira Gabriel Universidade Federal de Viçosa, Brazil
  • Fabrìcio José Missio Universidade Federal de Minas Gerais



manufacturing, technological frontier, real exchange rate


The main objective of this work is to analyze theoretically and empirically the interrelationships between the real exchange rate (RER) and the economic complexity level in a Keynesian-Structuralist framework for two regions, the (developed) North and the (developing) South. In the analysis presented here, the RER level matters for influencing the industrial (manufacturing) share of GDP as well as the GDP growth rate compatible with the balance-of-payments equilibrium. Higher levels of economic complexity influence the South growth rate, depending on the effects of innovation, knowledge stock, and human capital on international trade. The empirical evidence in panel data suggests that undervalued RER and a higher manufacturing share in the developing-countries sample exhibit positive and significant effects on the economic complexity level.

JEL codes: O10, O33, L16

Keywordsmanufacturing, technological frontier, real exchange rate


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How to Cite

Gabriel, L. F., & Missio, F. J. (2019). Real exchange rate and economic complexity in a North-South structuralist BoPG model. PSL Quarterly Review, 71(287), 439–465.




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