The Fundamental Determinants of the Terms of Trade

Findlay, Ronald; Södersten, Bo

doi:10.1007/978-1-349-16488-2_13

Cited by 29 publications

(23 citation statements)

References 4 publications

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“…Since we are interested in long run growth and capital accumulation we cannot use the static models of the type developed in Bacha [1978] and Spraos [1983], or models which are too general to explicitly focus on the process of capital formation as in Darity [1982], or which look at price relations only, and not at quantities and growth rates, as in Gibson [1980] and Evans [1981Evans [ , 1984. Alternative dynamic models explicitly considering the capital accumulation process are found in Krugman [1981], Dutt [1986a], Findlay [1981], Vines [1984] and Brewer [1985]; but see note 18. 8.…”

Section: Discussionmentioning

confidence: 99%

Monopoly power and uneven development: Baran revisited

Dutt

1988

Journal of Development Studies

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Baran examined the implications of the rise in monopoly power in advanced economies for the underdevelopment in poor countries, and the process of uneven development on a world scale. This article examines his work critically, and then presents a NorthSouth model which defines uneven development in a precise manner, and analyses the mechanism by which the rise in monopoly power leads to such uneven development. It is shown that the process can work even without reference to imperialism, which is a central, but controversial, element in Baran's analysis.

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Section: Discussionmentioning

confidence: 99%

Monopoly power and uneven development: Baran revisited

Dutt

1988

Journal of Development Studies

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“…4 In the mainstream literature, the Centre (Solow-type North) -Periphery (Lewis-type South) model by Findlay (1980Findlay ( , 1981 also showed this asymmetry. The logical extension of the dual economy framework of Kaldor and the neoclassical accommodation of the heterodox writings of Lewis (to model the situation of the Periphery while retaining the 'well-behaved' Solow growth model for the Centre) takes us to the same asymmetry that underpins the Prebisch -Singer hypothesis.…”

mentioning

confidence: 89%

“… '[T]echnical progress in manufacturing industries showed in a rise in incomes while technical progress in the production of food and raw materials in underdeveloped countries showed in a fall of prices'(Singer, 1950, p.475).5 Findlay (1980Findlay ( , 1981 reaches the same conclusion: 'while trade is the "engine of growth", in D.H. Robertson's famous phrase, the power that drives that engine is generated [by the] growth rate of the North [the Centre], the growth rate of the South [Periphery] adapting to the rate under the influence of changes in the terms of trade'(Findlay, 1981, p. 455). 398 P. Sarkar Downloaded by [North Dakota State University] at 13:23 04 November 2014…”

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confidence: 97%

A Centre–Periphery Framework on Kaldorian Lines

Sarkar

2009

Review of Political Economy

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This paper develops the seminal ideas of Nicholas Kaldor into a CentrePeriphery framework of the world economy, where the Centre faces the problem of surplus capacity and effective demand and the Periphery faces a capacity constraint. In such a framework, a Harrod-type 'foreign trade multiplier' works in a short-run partial equilibrium analysis: a rise in the Periphery's output increases demand for output of the Centre. There is some ambiguity in the short-run effect of the peripheral terms of trade on the output of the Centre. In the long-run equilibrium growth of the whole framework, the 'foreign trade multiplier' does not work. A rise in factor productivity or the growth rate in the Periphery leads to a fall in its terms of trade while the Centre remains unaffected. A rise in the productivity in the Centre affects its factor income, not its terms of trade.

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“…Building on Solow (1956 and1957), Findlay (1981) derives a sophisticated model determining the ToT, assuming that the North produces a single composite commodity (manufactures), which can be used for either consumption or investment. In short, Findlay (1981, p. 454) comes to the conclusion that "the fundamental determinants of the terms of trade are the tastes, technology and factor endowments of the trading partners."…”

Section: Iii1 Theoretical Foundations For the Prebisch-singer Hypotmentioning

confidence: 99%

Free Falling Terms of Trade Despite Industrialization: The Case of Bangladesh

Gunter

Vargas

2017

SSRN Journal

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Considering Bangladesh's successful industrialization, Bangladesh's sharply deteriorating terms of trade (ToT) are a puzzle for the original Prebisch-Singer hypothesis. The Prebisch-Singer hypothesis suggested that countries exporting primary products will experience deteriorating ToT, while countries exporting manufacturing goods will experience ToT improvements. This paper provides an empirical review of Bangladesh's ToT from 1980 to 2013. It reviews the theoretical literature explaining the Prebisch-Singer hypothesis and uses econometric analyses to determine some of the key factors for Bangladesh's ToT deterioration. It shows that exchange rate devaluations and increases in export quantity have a negative impact on the ToT, while improvements in export quality have some positive impact on the ToT. In the case of Bangladesh, the problem however is that export quality has been decreasing, contributing to sharply falling ToT. The key policy implication is that export promotion policies need to be refined, focusing also on export quality, not only export quantity.

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The Fundamental Determinants of the Terms of Trade

Cited by 29 publications

References 4 publications

Monopoly power and uneven development: Baran revisited

Monopoly power and uneven development: Baran revisited

A Centre–Periphery Framework on Kaldorian Lines

Free Falling Terms of Trade Despite Industrialization: The Case of Bangladesh

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