Resilience to shrinking as a catch-up strategy: a comparison of Brazil and Indonesia, 1964–2010

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2022
Paper author(s): 
Tobias Axelsson
Igor Martins
Topic: 
Macroeconomics - Economic growth - Monetary Policy
Year: 
2022

Development economics has long focused on growth patterns to explain countries’ ability to catch up and forge ahead. We argue, however, that resilience to economic shrinking matters more. Using the examples of Brazil and Indonesia, we propose that a framework consisting of social capabilities – namely structural transformation, autonomy, and inclusion – can explain why Indonesia is more resilient to economic shrinking than Brazil and why the country is more likely to be successful in its catching-up process.

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