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

Author

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  • Ricardo Azevedo Araujo

    (Departamento de Economia, Universidade de Brasilia (UFB), Brasília, DF – Brasil.)

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, March.
    • Handle: RePEc:ekm:repojs:v:36:y:2016:i:1:id:95167
    DOI: 10.1590/0101-31572016v36n01a09
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    Keywords

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    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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