Growth model change in emerging economies: sectorial loci of growth and politics

Abstract

The article contributes to an ongoing debate in comparative political economy on the integration of the demand and supply sides in growth model (GM) analysis. In particular, the article focuses on the characteristics of export-led GMs in emerging economies and addresses questions of GM change. The article makes two contributions. First, for capturing differences between countries that adopt export-led growth, the article introduces the concept of a sectoral locus of growth. Second, the article links GM change to the interaction of politics and sectoral transformations that a country accumulated during the preceding GM. The article presents empirical support for its arguments from the cases of Estonia and Lithuania, which both recovered from the Global Financial Crisis by shifting from debt-led to export-led growth based, however, on different sectoral loci of growth: exports of low-quality manufacturing and services in Lithuania and exports of dynamic services in Estonia.