Balance of Payments Constraint — Trade and Finance

Abstract

This paper summarizes conceptual aspects of two contemporary global phenomena: “economic growth external constraint” or “balance of payments constraint (BPC)” and “financial flows”, both of them especially studied as structural features of Argentina economy. Our general hypothesis is that external constrain, in its commercial (exports and imports relative income-elasticity) or financial (unsustainable debt, interest payments) versions, means a significant difficulty for some countries’ growth. Besides, financial outflows (purchase of foreign assets by residents, capital flight), offer various additional complexities. Both performs simultaneously as cause and consequence of growth, as circular cumulative causation (CCC).