Assessing the dynamics of terms of trade in a model of cumulative causation and structural change

Abstract

Assessing the dynamics of terms of trade in a model of cumulative causation and structural change ABSTRACT: The motivation for this paper stems from the steady decline in the share of consumer expenditures on goods produced in the global south, coupled with the (empirically ambiguous) Singer/Prebisch hypothesis that this can be explained by a secular decline in the southern terms of trade. drawing on these sources of inspiration, the paper sets out to study the dynamics of the terms of trade using a multi-sector growth model based on the principle of cumulative causation. The upshot is a North-South model of growth and trade in which the evolution of the terms of trade depends on differential rates of productivity growth in different sectors of the economy -and in which terms of trade dynamics may not be the best guide as to whether or not there is an uneven development problem.

Causação cumulativa, taxa de câmbio real e progresso tecnológico endógeno em uma abordagem dinâmica de mudança estrutural multilateral: uma análise teórica e empírica

“…O trabalho tem por objetivo desenvolver um modelo multisetorial e multilateral de causação cumulativa com progresso tecnológico endógeno e taxa de câmbio real. A literatura export-led growth, baseada inicialmente no modelo Dixon and Thirlwall (1979), avançou para uma abordagem multisetorial segundo Araujo (2013). Entretanto, o modelo multisetorial originalmente desenvolvido por Araujo e Lima (2007), desconsidera a taxa de câmbio real, bem como a presença de múltiplos parceiros comerciais e mantém a taxa de variação da produtividade do trabalho nula.…”

“…The work aims to develop a multi-sectoral cumulative causation model with endogenous technological progress. The export-led growth literature, originally based in Dixon and Thirlwall (1979) model, advanced to a multi-sectoral approach by Araujo (2013). However, the multisectoral model originally developed by Araujo and Lima (2007), disregards the exchange rate and keeps the rate of change of labor productivity null.…”