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Assessing the dynamics of terms of trade inamodelof cumulative causation andstructural change

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  • Ricardo Azevedo Araujo

Abstract

The motivation for this paper stems from the steady decline in the share of consumer expenditure son 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. JEL Classification: O19; F12.

Suggested Citation

  • Ricardo Azevedo Araujo, 2016. "Assessing the dynamics of terms of trade inamodelof cumulative causation andstructural change," Brazilian Journal of Political Economy, Center of Political Economy, vol. 36(1), pages 150-167.
    • Handle: RePEc:ekm:repojs:v:36:y:2016:i:1:p:150-167:id:177
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    2. Trofimov, Ivan D., 2018. "Income terms of trade and economic convergence: Evidence from Latin America," MPRA Paper 87598, University Library of Munich, Germany.

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    More about this item

    Keywords

    structural economic dynamics; terms of trade;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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