Economic Growth and the Rate of Profit in Colombia 1967-2019: A VAR Time-Series Analysis

Duque Garcia, Carlos Alberto (2021): Economic Growth and the Rate of Profit in Colombia 1967-2019: A VAR Time-Series Analysis.

Abstract

In recent decades there has been a growing literature dealing with the empirical estimation of the rate of profit and other Marxian variables in several countries. Nonetheless, there has been a paucity of econometric research about the impact of those Marxian variables on the growth rate in developing countries. This paper seeks to evaluate the rate of profit and the rate of accumulation as determinants of the growth rate in Colombia during 1967-2019, using a VAR model. We find that both variables are statistically significant and, in concordance with Marxian theory predictions, affect positively the growth rate. We also identify direct impacts of growth rate over the profit rate and the accumulation rate as well as an inverse relationship between these last variables.

• Item Type: MPRA Paper
• Language: English
• Keywords: Marxian political economy; rate of profit; time-series analysis; Colombia
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B51 - Socialist ; Marxian ; Sraffian; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O54 - Latin America ; Caribbean

References

Althusser, Louis, Etienne Balibar, and Ben Brewster. 1970. Reading Capital. Vol. 19. Nlb London.

Álvarez, Jairo Estrada. 2006. “Las Reformas Estructurales y La Construcción Del Orden Neoliberal En Colombia.” Los Desafios de Las Emancipaciones Em Um Contexto Militarizado. Colección Grupos de Trabajo de CLACSO. Buenos Aires, CLACSO Libros, 247–84.

Archila, Mauricio. 2002. 25 Años de Luchas Sociales En Colombia: 1975-2000. Cinep.

Bai, Jushan, and Pierre Perron. 2003. “Critical Values for Multiple Structural Change Tests.” The Econometrics Journal 6 (1): 72–78.

Basu, Deepankar. 2014. “Comparative Growth Dynamics in a Discrete-Time Marxian Circuit of Capital Model.” Review of Radical Political Economics 46 (2): 162–83. https://doi.org/10.1177/0486613413497909.

———. 2017. “Quantitative Empirical Research in Marxist Political Economy: A Selective Review.” Journal of Economic Surveys 31 (5): 1359–86.

Basu, Deepankar, and Panayiotis T. Manolakos. 2013. “Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy, 1948-2007.” Review of Radical Political Economics 45 (1): 76–95. https://doi.org/10.1177/0486613412447059.

Bellofiore, Riccardo. 2005. “The Monetary Aspects of the Capitalist Process in the Marxian System: An Investigation from the Point of View of the Theory of the Monetary Circuit.” In Marx’s Theory of Money, 124–39. Springer.

Blecker, Robert A, and Mark Setterfield. 2019. Heterodox Macroeconomics: Models of Demand, Distribution and Growth. Edward Elgar Publishing.

Brunhoff, Suzanne de, and Duncan Foley. 2007. “Karl Marx’s Theory of Money and Credit.” Edward Elgar Publishing.

Bulmer-Thomas, Victor. 2003. The Economic History of Latin America since Independence. Cambridge University Press.

Cámara, Sergio. 2005. “Fluctuaciones Cíclicas En México (1950-2003). Una Perspectiva Clásica de Corto y Largo Plazo.” México, Universidad Autónoma Metropolitana-Azcapotzalco. Departamento de ….

———. 2007. “The Dynamics of the Profit Rate in Spain (1954—2001).” Review of Radical Political Economics 39 (4): 543–61.

———. 2010. “Producción, Explotación, Acumulación y Reproducción. Un Modelo Macroeconómico Básico de La Teoría Laboral Del Valor.” Otra Teoría Económica Es Posible. Ensayos Críticos de Economía Política, Coords. Juan Pablo Mateo y Ricardo Molero, 257–89.

———. 2013. “The Cyclical Decline of the Profit Rate as the Cause of Crises in the United States (1947-2011).” Review of Radical Political Economics 45 (4): 463–71. https://doi.org/10.1177/0486613412475186.

Carchedi, Guglielmo, and Michael Roberts. 2013. “The Long Roots of the Present Crisis: Keynesians, Austerians, and Marx’s Law.” World Review of Political Economy 4 (1): 86–115.

CEPAL. 2020. “Cepalstat.” 2020. https://cepalstat-prod.cepal.org/cepalstat/tabulador/ConsultaIntegrada.asp?idIndicador=2196&idioma=e.

Clévenot, Mickaël, Yann Guy, and Jacques Mazier. 2010. “Investment and the Rate of Profit in a Financial Context: The French Case.” International Review of Applied Economics 24 (6): 693–714.

Cockshott, Paul, Allin Cottrell, and Greg Michaelson. 1995. “Testing Marx: Some New Results from UK Data.” Capital & Class 19 (1): 103–30.

DANE. 2020. “Annual National Accounts.” 2020. https://www.dane.gov.co/index.php/en/statistics-by-topic-1/national-accounts/annual-national-accounts.

Dickey, David A, and Wayne A Fuller. 1979. “Distribution of the Estimators for Autoregressive Time Series with a Unit Root.” Journal of the American Statistical Association 74 (366a): 427–31.

Duménil, Gérard, Mark Glick, and Jose Rangel. 1987. “The Rate of Profit in the United States.” Cambridge Journal of Economics 11 (4): 331–59.

Duménil, Gérard, and Dominique Lévy. 1999. “Being Keynesian in the Short Term and Classical in the Long Term: The Traverse to Classical Long‐term Equilibrium.” The Manchester School 67 (6): 684–716.

———. 2003. “Technology and Distribution: Historical Trajectories à La Marx.” Journal of Economic Behavior and Organization 52 (2): 201–33. https://doi.org/10.1016/S0167-2681(03)00022-2.

Foley, Duncan K. 1982. “The Value of Money the Value of Labor Power and the Marxian Transformation Problem.” Review of Radical Political Economics 14 (2): 37–47. https://doi.org/10.1177/048661348201400204.

———. 2000. “Recent Developments in the Labor Theory of Value.” Review of Radical Political Economics 32 (1): 1–39. https://doi.org/10.1177/048661340003200101.

Foley, Duncan K. 1986. Money, Accumulation, and Crisis. Vol. 2. Taylor & Francis.

Foley, Duncan K, Thomas R Michl, and Daniele Tavani. 2019. Growth and Distribution. Harvard University Press.

Freeman, Alan. 1996. “Price, Value and Profit–a Continuous, General, Treatment.”

Galeano, Gabriel PIRAQUIVE, Mariana MATAMOROS CÁRDENAS, Erick CESPEDES Rangel, and Jhonathan RODRÍGUEZ Chacón. 2018. “Actualización de La Tasa de Rendimiento Del Capital En Colombia Bajo La Metodología de Harberger.” Departamento Nacional de Planeación.

Gaulard, Mylène. 2018. “The Chinese Economic Crisis: A Marxist Approach.”

Guerrero, Diego. 1989. “Acumulación de Capital, Distribución de La Renta y Crisis de Rentabilidad En España (1954-1987).” Universidad Complutense, Departamento de Economía Aplicada I.

Harberger, Arnold C. 1972. “On Estimating the Rate of Return to Capital in Colombia.” In Project Evaluation, 132–56. Springer.

Harris, Donald J. 1983. “Accumulation of Capital and the Rate of Profit in Marxian Theory.” Cambridge Journal of Economics 7 (3/4): 311–30.

Jeong, Guhyeon, and Seongjin Jeong. 2020. “Trends of Marxian Ratios in South Korea, 1980–2014.” Journal of Contemporary Asia 50 (2): 260–83.

Kliman, Andrew, and Ted McGlone. 1999. “A Temporal Single-System Interpretation of Marx’s Value Theory.” Review of Political Economy 11 (1): 33–59.

Kwiatkowski, Denis, Peter C B Phillips, Peter Schmidt, and Yongcheol Shin. 1992. “Testing the Null Hypothesis of Stationarity against the Alternative of a Unit Root.” Journal of Econometrics 54 (1–3): 159–78.

Laibman, David. 1978. “The Marxian Profit Cycle: A Macromodel.” Eastern Economic Journal 4 (2): 119–28.

Maito, Esteban. 2012. “La Tasa de Ganancia En Chile 1986-2009.” Razón y Revolución, 43–63. http://www.revistaryr.org.ar/index.php/RyR/article/view/4/4.

———. 2015. “Cien Años de Acumulación de Capital En Argentina: Tasa de Ganancia, Composición Del Capital y Distribución Del Producto.” Ensayos de Economía 25 (47): 37–62.

Maniatis, Thanasis, and Costas Passas. 2013. “Profitability Capital Accumulation and Crisis in the Greek Economy 1958–2009: A Marxist Analysis.” Review of Political Economy 25 (4): 624–49.

Mariña, Abelardo. 2001. “Formación y Acervos de Capital En México, 1949-1999.” Análisis Económico 17 (34): 231–56.

Mariña, Abelardo, and Fred Moseley. 2000. “The Rate of Profit in the Postwar Mexican.” In Political Economy and Contemporary Capitalism: Radical Perspectives on Economic Theory and Policy, 184. ME Sharpe.

Marquetti, Adalmir, Eduardo Maldonado Filho, and Vladimir Lautert. 2010. “The Profit Rate in Brazil, 1953-2003.” Review of Radical Political Economics 42 (4): 485–504.

Marquetti, Adalmir, and Melody de Campos Soares Porsse. 2014. “Patrones de Progreso Técnico En La Economía Brasileña, 1952-2008.” Cepal Review, no. 113: 61–78. https://doi.org/10.18356/46301e49-es.

Marx, Karl. 1867. El Capital, Tomo I. 1975th ed. Ciudad de México: Siglo XXI Editores.

———. 1894. El Capital, Tomo III. Edited by Federico Engels. 1976th ed. Ciudad de México: Siglo XXI Editores.

———. 1990. Capital: A Critique of Political Economy, Volume 1. 1867th ed. London: Penguin Classics.

———. 1991. Capital: A Critique of Political Economy, Volume 3. Edited by F. Engels. 1894th ed. London: Penguin Classics.

Moseley, Fred. 1991. The Falling Rate of Profit in the Postwar United States Economy. Springer.

———. 2016. Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the’transformation Problem’. Brill.

Pesaran, H Hashem, and Yongcheol Shin. 1998. “Generalized Impulse Response Analysis in Linear Multivariate Models.” Economics Letters 58 (1): 17–29.

Phillips, Peter C B, and Pierre Perron. 1988. “Testing for a Unit Root in Time Series Regression.” Biometrika 75 (2): 335–46.

Shaikh, Anwar. 1989. “Accumulation, Finance and Effective Demand in Marx, Keynes and Kalecki.” Financial Dynamics and Business Cycles: New Perspectives, 65–86.

———. 1992. “The Falling Rate of Profit as the Cause of Long Waves: Theory and Empirical Evidence.” In New Findings in Long-Wave Research, 174–202. Springer.

———. 1998. “The Empirical Strength of the Labour Theory of Value.” In Marxian Economics: A Reappraisal, 225–51. https://doi.org/10.1007/978-1-349-26121-5_15.

———. 2016. Capitalism: Competition, Conflict, Crises. Oxford University Press.

Shaikh, Anwar, and E Ahmet Tonak. 1994. Measuring the Wealth of Nations: The Political Economy of National Accounts. Cambridge University Press Cambridge.

Sims, Christopher A. 1980. “Macroeconomics and Reality.” Econometrica: Journal of the Econometric Society, 1–48.

Stock, James H, and Mark W Watson. 2001. “Vector Autoregressions.” Journal of Economic Perspectives 15 (4): 101–15.

Tapia, Jose. 2013. “Does Investment Call the Tune? Empirical Evidence and Endogenous Theories of the Business Cycle.” Research in Political Economy 28: 229–59.

Thomson, Frances. 2011. “The Agrarian Question and Violence in Colombia: Conflict and Development.” Journal of Agrarian Change 11 (3): 321–56. https://doi.org/10.1111/j.1471-0366.2011.00314.x.

Urrutia, Miguel, and Mauricio Ruiz. 2010. “Ciento Setenta Años de Salarios Reales En Colombia.”

Weisskopf, Thomas E. 1979. “Marxian Crisis Theory and the Rate of Profit in the Postwar US Economy.” Cambridge Journal of Economics 3 (4): 341–78.

Wolff, Edward N. 1979. “The Rate of Surplus Value, the Organic Composition, and the General Rate of Profit in the US Economy, 1947-67.” The American Economic Review 69 (3): 329–41.