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Terms of Trade in a Multi-Sectoral Framework: Analysis for All-India and States

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Author Info
Surajit Deb (Ram Lal Anand College (Evening))
Abstract

Conventionally, the analytical treatment of domestic terms of trade is accomplished within a dual economy framework, wherein its empirical estimation is worked out by calculating the barter terms of trade between an "agriculture" and "industry" sector. However, since contemporary economies have undergone rapid structural transformation, which has seen the emergence of a third "services' sector, it has become vital to analyse shifts in sectoral terms of trade by exploiting a multi-sectoral framework. In this paper, we employ a multi-sectoral accounting framework to examine the pattern of terms of trade movements in India. The estimates of "terms of trade effect" are generated for the three broad domestic sectors, viz. agriculture and allied, industry and services, and further for a detailed nine-sector classification. We also construct comparable estimates of terms of trade effect for three broad sectors encompassing fifteen major states in India. The time period of analysis is 1951-97 at the all-India level and 1971-96 at the level of individual states. A natural consequence of the two-sector analysis of domestic terms of trade has been that adverse movements in agriculture are believed to emerge due to supportive industrial terms of trade. Our multi-sectoral analysis indicates that terms of trade gains in the Indian economy, if any, have accrued in the agriculture and services sectors, and not in the manufacturing (or aggregate industry) sector.

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Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 112.

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Length: 55 pages
Date of creation: Dec 2002
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Handle: RePEc:cde:cdewps:112

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Keywords: terms of trade measure; national accounts; service sector; regional variation.;

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Find related papers by JEL classification:
Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. V. Pandit, 2000. "Data Relating to Prices in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 35(1), pages 77-96, January.
  2. Kurabayashi, Yoshimasa, 1971. "The Impact of Changes in Terms of Trade on a System of National Accounts: An Attempted Synthesis," Review of Income and Wealth, Blackwell Publishing, vol. 17(3), pages 285-97, September.
  3. Surajit Deb, 2002. "The Debate on Agriculture-Industry Terms of Trade in India," Working papers 109, Centre for Development Economics, Delhi School of Economics. [Downloadable!]
  4. Gutmann, Pierre, 1981. "The Measurement of Terms of Trade Effects," Review of Income and Wealth, Blackwell Publishing, vol. 27(4), pages 433-53, December.
  5. repec:cup:cbooks:9780521556231 is not listed on IDEAS
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