We now are ready to present a formal model of economic growth that synthesizes the state of the theoretical discussion so far. As seen in Chapter 3 , the long-term growth of middle-income countries depends on the investment rate and on the growth of exports. This growth, however, is subject to three kinds of constraints. The fi rst is the foreign constraint, analyzed by the growth models à la Thirlwall. If we take into account the effect of the exchange rate on the economy’s productive structure, the income elasticities of exports and imports of Thirlwall’s model are endogenous, so that, if the exchange rate is duly aligned (that is, at the level corresponding to the industrial equilibrium), any growth rate will be sustainable from the standpoint of the equilibrium of the balance of payments (that is, the foreign constraint will never be an obstacle to long-term growth). But there will be an exchange rate constraint because, if the country leaves its economy at the mercy of the international market, of the policies of growth cum foreign savings, of the exchange rate as an instrument to control infl ation, and of exchange rate populism, and if it fails to neutralize the Dutch disease, the exchange rate will be overvalued most of the time rather than at the industrial equilibrium level.