Harrod's Dynamics and the Kaldor-Thirlwall Export-led Growth

This paper investigates an open economy macrodynamic model on Harrodian lines. The analysis starts with a reconsideration of the post-Keynesian ThirlwallâÂÂs approach to growth in open economy. We cast doubt on the Thirlwall idea aimed at rendering the concept of HarrodâÂÂs foreign trade multiplier genuinely consistent with HarrodâÂÂs dynamics. Following a different procedure from ThirwallâÂÂs approach, we start from HarrodâÂÂs dynamics in a closed economy and investigate what happens when the foreign trade is introduced. An important result of our model is that, according to HarrodâÂÂs intuition, there is less cyclical instability in the open economy than in the closed one where chaotic instability prevails. Dynamics in our model exhibits a limit cycle. Finally, the model shows that the possibility of an export-led growth strictly depends on the technical progress dynamics.