Manufactoring, economic growth, and real exchange rate: Empirical evidence in panel data and input-output multipliers


  • Luciano Ferreira Gabriel Universidade Federal de Viçosa (UFV)
  • Luiz Carlos De Santana Ribeiro Universidade Federal de Sergipe
  • Frederico Gonzaga Jayme Jr. Universidade Federal de Minas Gerais
  • José Luis Oreiro Economics Department, University of Brasilia



Manufacturing, real exchange rate, economic growth, input-output multipliers


This paper investigates the effects of manufacturing and of the real exchange rate (RER) on real per capita income growth. We use dynamic panel models and the calculation of output and employment multipliers for a diversified sample of countries from 1990 to 2011. Three important results can be highlighted. First, we provide new evidence that manufacturing is the most important tradable sector for achieving greater real per capita income growth for developing countries. Second, the greater a country’s gap in relation to the technological frontier, the greater the positive effect of an undervalued RER on the real per capita incomegrowth rate. Finally, the manufacturing industry’s output multipliers and employment multipliers in the developing countries are higher than those in in developed ones, in all years analyzed.

JEL codes: F43, L16, R15

Author Biography

José Luis Oreiro, Economics Department, University of Brasilia

Associante Professor at Economics Department, University of Brasília


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How to Cite

Gabriel, L. F., Ribeiro, L. C. D. S., Jayme Jr., F. G., & Oreiro, J. L. (2020). Manufactoring, economic growth, and real exchange rate: Empirical evidence in panel data and input-output multipliers. PSL Quarterly Review, 73(292), 51–75.