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Was industrialization an escape from the commodity lottery? Evidence from Italy, 1861-1939

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  • Federico, Giovanni
  • Vasta, Michelangelo

Abstract

The specialization in exporting primary products is frequently deemed harmful for long-run development, because it increases volatility of terms of trade and thus the number and frequency of macroeconomic shocks. One would expect modern economic growth to solve the problem by changing the composition of trade. This paper tests this hypothesis with a new series of Italian terms of trade from 1861 to 1939, a period which spans the first stage of the industrialization of the country. The results do not tally with the hypothesis. The change in composition improved marginally the terms of trade, but it did not help much in terms of volatility.

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Bibliographic Info

Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 47 (2010)
Issue (Month): 2 (April)
Pages: 228-243

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Handle: RePEc:eee:exehis:v:47:y:2010:i:2:p:228-243

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Web page: http://www.elsevier.com/locate/inca/622830

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Keywords: Italian trade Terms of trade Economic growth Volatility;

References

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  1. Hadass, Yael S & Williamson, Jeffrey G, 2003. "Terms-of-Trade Shocks and Economic Performance, 1870-1940: Prebisch and Singer Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 629-56, April.
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  10. Turnovsky, Stephen J. & Chattopadhyay, Pradip, 2003. "Volatility and growth in developing economies: some numerical results and empirical evidence," Journal of International Economics, Elsevier, vol. 59(2), pages 267-295, March.
  11. Paul Cashin & Catherine Pattillo, 2006. "African terms of trade and the commodity terms of trade: close cousins or distant relatives?," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 845-859.
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