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The Fallacy Of Composition: A Review Of The Literature

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Author Info
Jörg Mayer
Abstract

The paper reviews the literature on the fallacy of composition with an emphasis on labour-intensive manufactures. It briefly addresses the protectionist and the partial-equilibrium versions of the argument before focusing on general-equilibrium considerations and the debate on the manufactures terms of trade of developing countries. The review indicates a potential fallacy of composition problem in labour-intensive manufactures, where competition among different groups of developing countries for export market shares may constitute a new form of the fallacy of composition. The likelihood of a country that exports labour-intensive manufactures to become subject to the fallacy of composition rises with the increasing integration of several strongly populated low-income countries into world markets, while it declines with continuous structural change and favourable aggregate demand conditions particularly in developed and the advanced developing countries.

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Paper provided by United Nations Conference on Trade and Development in its series UNCTAD Discussion Papers with number 166.

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Date of creation: 2003
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Handle: RePEc:unc:dispap:166

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References listed on IDEAS
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. Warwick J. McKibbin & K. K. Tang, 2000. "Trade and Financial Reform in China: Impacts on the World Economy," The World Economy, Blackwell Publishing, vol. 23(8), pages 979-1003, 08. [Downloadable!] (restricted)
  2. Cline, William R., 1982. "Can the East Asian model of development be generalized?," World Development, Elsevier, vol. 10(2), pages 81-90, February. [Downloadable!] (restricted)
  3. Athukorala, Premachandra, 1993. "Manufactured exports from developing countries and their terms of trade: A reexamination of the Sarkar-Singer results," World Development, Elsevier, vol. 21(10), pages 1607-1613, October. [Downloadable!] (restricted)
  4. Bloch, Harry & Sapsford, David, 2000. "Whither the Terms of Trade? An Elaboration of the Prebisch-Singer Hypothesis," Cambridge Journal of Economics, Oxford University Press, vol. 24(4), pages 461-81, July.
  5. Arjan Lejour, 2001. "China and the WTO: The Impact on China and the World Economy," Trade Working Papers 207, East Asian Bureau of Economic Research. [Downloadable!]
  6. Faini, Riccardo & Clavijo, Fernando & Senhadji-Semlali, Abdel, 1992. "The fallacy of composition argument : Is it relevant for LDCs' manufactures exports?," European Economic Review, Elsevier, vol. 36(4), pages 865-882, May. [Downloadable!] (restricted)
  7. Martin, Will & Mitra, Devashish, 2001. "Productivity Growth and Convergence in Agriculture versus Manufacturing," Economic Development and Cultural Change, University of Chicago Press, vol. 49(2), pages 403-22, January.
  8. Hertel, Thomas W. & Terrie Walmsley, 2000. "China's Accession to the WTO: Timing is Everything," GTAP Working Papers 403, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
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  9. Schiff, Maurice, 1995. "Commodity exports and the adding-up problem in LDCs: Trade, investment and lending policy," World Development, Elsevier, vol. 23(4), pages 603-615, April. [Downloadable!] (restricted)
  10. Sapsford, David, 1990. "Primary Commodity Prices and the Terms of Trade," The Economic Record, The Economic Society of Australia, vol. 66(195), pages 342-56, December.
  11. Elena Ianchovichina & Will Martin & Emiko Fukase, 2001. "Assessing the Implications of Merchandise Trade Liberalization in China's Accession to WTO," Trade Working Papers 192, East Asian Bureau of Economic Research. [Downloadable!]
  12. Bleaney, Michael F & Greenaway, David, 1993. "Long-Run Trends in the Relative Price of Primary Commodities and in the Terms of Trade of Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 349-63, July. [Downloadable!] (restricted)
  13. Ianchovichina, Elena & Martin, Will, 2001. "Trade liberalization in China's accession to the World Trade Organization," Policy Research Working Paper Series 2623, The World Bank. [Downloadable!]
  14. Zhi Wang, 1999. "The Impact of China's WTO Entry on the World Labour-intensive Export Market: A Recursive Dynamic CGE Analysis," The World Economy, Blackwell Publishing, vol. 22(3), pages 379-405, 05. [Downloadable!] (restricted)
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Cited by:
(explanations, 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. William Milberg, 2007. "Exporting Processing Zones, Industrial Upgrading and Economic Development: A Survey," SCEPA Working Papers 2007-10, Schwartz Center for Economic Policy Analysis (SCEPA), New School University. [Downloadable!]
  2. Rod Tyers & Jane Golley & Ian Bain, 2007. "Projected Economic Growth in China and India: The Role of Demographic Change," ANUCBE School of Economics Working Papers 2006-477, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  3. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Risk," ANUCBE School of Economics Working Papers 2006-461, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  4. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Premia," PGDA Working Papers 1206, Program on the Global Demography of Aging. [Downloadable!]
  5. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: Demographic Change and the Labour Supply Constraint," PGDA Working Papers 1106, Program on the Global Demography of Aging. [Downloadable!]
  6. Arslan Razmi & Robert A. Blecker, 2006. "Developing Country Exports of Manufactures: Moving Up the Ladder to Escape the Fallacy of Composition?," Working Papers 2006-06, American University, Department of Economics. [Downloadable!]
  7. Jane Golley & Rod Tyers, 2006. "Demographic Change and the Labour Supply Constraint," ANUCBE School of Economics Working Papers 2006-467, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  8. Barry Eichengreen & Yeongseop Rhee & Hui Tong, 2004. "The Impact of China on the Exports of Other Asian Countries," NBER Working Papers 10768, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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