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

  • Federico, Giovanni
  • Vasta, Michelangelo

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622830

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  9. Fenoaltea, Stefano, 2005. "The growth of the Italian economy, 1861 1913: Preliminary second-generation estimates," European Review of Economic History, Cambridge University Press, vol. 9(03), pages 273-312, December.
  10. David S. Jacks, Kevin H. O'Rourke and Jeffrey G. Williamson, 2009. "Commodity Price Volatility and World Market Integration since 1700," The Institute for International Integration Studies Discussion Paper Series iiisdp280, IIIS.
  11. Romero-Ávila, Diego, 2009. "Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP," World Development, Elsevier, vol. 37(6), pages 1051-1068, June.
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