Harrod-Domar Dilemma, Thirlwall’s Law and Green New Developmentalism

Abstract

The article aims to address the ecological transition into a model that integrates the Harrod-Domar Dilemma and the New Developmentalism according to a Green New Developmentalism perspective. To this end, this paper focuses on the green sides of the middleincome countries’ traps by introducing a novel concept of the ecologically sustainable output growth rate into the new developmentalism model developed by Oreiro (2023) to identify a balanced ecological growth path. Compensating for the price competitiveness losses pro duced by the exchange rate over-valuation, Ecological Structural Change and green finance allow for reversing the process of premature de-industrialization by improving the competitiveness of the manufacturing sector.