Abstract:

Economic literature generally contains growth models dominated by classical/neo-classical approach. These models focused on the differences in the growth rates among countries in terms of supply of factors of production. Wheras capital accumulation and technical progress are viewed as the main determinant of the growth, increase in per-capita income is only determined by supply-side factors. Should the economy is in the position of under-employment and under-capacity, then these approaches are not capable of satisfactory explanation for the economic growth. Assumptions of supply-side approach are endogenous regarding the economic system and restricted by the demand. In an open economy, growth can be defined as a component of a Keynesian demand-oriented economic system and it is genarally called as Post-Keynesian growth models. These models have been developed on two main axes: “Export-led growth model”, introduced by N. Kaldor and “balance-of-payment constrainedgrowth model”introduced by A.P.Thirwall in 1979. Export-led growth model is based on the assumption that internally determined productivity increases generate a virtous circle economy. Balance-of-payment constrained growth model, on the other hand, is based on the assumption that foreign trade deficit cannot continue forever and that long-run growth rate is a function of the export and elasticity of demand for import of the country. The objective of this paper is to discuss and critisize export-led growth and balance-of-payment constrained growth model.

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