Impact of the external sector on economic growth in Paraguay during the period 1994-2020

In this paper, using empirical and statistical research, we analyze the impact of the external sector on economic growth in Paraguay during the 1994-2020 period. The results enabled the assessment of the validity of the income elasticities of imports calculated in the long term, attributed to the presence of cointegration among the series. Consequently, the economic growth rate associated with the external balance was obtained, aligning with Thirlwall’s Law. The empirical analysis and validation of Thirlwall’s Law suggest that the growth dynamics of the Paraguayan economy can be explained by the Thirlwall model. Thus, it was determined that the external sector has had an impact on Paraguay’s economic growth.