March 5, 2021

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Professors at UPR Cayey, Oxford and Ohio University in global study on economics

The University of Puerto Rico in Cayey, announced that Dr. José Caraballo Cueto associate professor of the Department of Business Administration and of the Institute for Interdisciplinary Research (III), in Together with other collaborators from Denison University in Ohio and the University of Oxford in the United Kingdom, they carried out a global study.

The study showed that there is a better long-term growth of the economies where all their economic sectors (such as tourism, agriculture and manufacturing) grow than the unbalanced economies that depend more on a single sector.

“This debate was inconclusive in the 1970s due to insufficient data, but now we do have data from 177 countries for the period from 1970 to 2014. After using multiple estimates, we reached a robust conclusion: most of economies grow better in the long term through balanced growth. That is to say, for a given period a sector can bring bonanza, but it may not be sustained in the long term: we live this with the beginning and end of Section 936, "explained Dr. Caraballo.

The research is titled "Balanced versus unbalanced growth: Revisiting the forgotten debate with new empirics" was published in the Review of Development Economics by Wiley.

In it, different unbalance indices between sectors are calculated, including the standard deviation. Later, these indices were included as an additional determinant in a set of statistical estimates under the economic growth model developed by the economist Robert Solow.

Likewise, the doctor Caraballo Cueto exposed that, “ this research can contribute to the discussion of economic policies for Puerto Rico using the world experience as a basis. For example, a revival of factories has been proposed based on new federal incentives, which I favor. However, it is not possible to depend on a single sector again. For this, you have to link this foreign manufacturing with local manufacturing and with the service sector, ”said the economist.

“On the other hand, tourism incentives should be conditioned on the purchase of Puerto Rican agricultural products. In the commercial sector, local businesses should be prioritized because they reinvest their profits in other sectors. In other words, a concerted strategy is needed so that most economic sectors grow in a similar way. The tactic of betting on a single economic sector is that as if we were betting on a single horse in a race, for this reason it represents many risks, especially when we do not control those federal incentives, "he concluded.

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