In a classical world where prices of both northern manufactures and southern raw materials are determined by market demand and supply, technical progress in one region leads to a terms-of-trade improvement of the other region irrespective of whether technical progress is labor-saving or raw-material saving. But in a neo-Kaleckian framework characterized by surplus capacity, and an effective demand problem in the North and a capacity constraint in the South, the terms of trade would turn against the South even if the North experienced a higher rate of technical progress than that of the South. Copyright 2001 by Blackwell Publishing Ltd
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Volume (Year): 5 (2001) Issue (Month): 3 (October) Pages: 433-43 Download reference. The following formats are available: HTML
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