Research shows an uneven partition of value added along commodity chains between transnational firms and producers in developing countries. This paper briefly discusses how such a distribution occurs and how it leads to unequal exchange in trade. A North-South trade model reveals the uneven development consequences of this exchange. The terms of trade between North and South help maintain a gap in capital accumulation between the two regions. The model reveals that capital flows covering the trade deficit of the South with the North may help stimulate the unrequited transfer of real resources from South to North.
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Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number
0411.
Find related papers by JEL classification: F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General F2 - International Economics - - International Factor Movements and International Business F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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