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Assessing the Dynamics of Terms of Trade in a Model of Cumulative Causation and Structural Change

  • Araujo, Ricardo

Following a structural economic dynamic approach, this paper examines the potential impact of cumulative causation on the dynamics of terms of trade between North-South countries. Cumulative causation although being responsible for generating technical progress may cause leakage of some productivity gains from the exporting sectors to abroad. In this vein possibilities exist that the laggard countries benefit from this effect but the final outcome depends on structural economic dynamics of both developed and underdeveloped nations. The overall dynamics of the terms of trade is then shown to be strongly affected both by demand and supply considerations.

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File URL: http://mpra.ub.uni-muenchen.de/46049/1/MPRA_paper_46049.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 46049.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:46049
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  1. Ricardo Azevedo Araujo & JoanÌlio Rodolpho Teixeira, 2003. "An Extension of the Structural Change Model to International Economic Relations," Metroeconomica, Wiley Blackwell, vol. 54(4), pages 458-473, November.
  2. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 755-774, September.
  3. Araujo, Ricardo Azevedo, 2013. "Cumulative causation in a structural economic dynamic approach to economic growth and uneven development," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 130-140.
  4. Helle Bunzel & Timothy Vogelsang, 2003. "Powerful Trend Function Tests That are Robust to Strong Serial Correlation with an Application to the Prebisch Singer Hypothesis," Econometrics 0304002, EconWPA.
  5. 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.
  6. Ocampo, José Antonio & Parra-Lancourt, Mariángela, 2010. "The terms of trade for commodities since the mid-19th century," Revista de Historia Económica, Cambridge University Press, vol. 28(01), pages 11-43, March.
  7. Sarkar, Prabirjit, 1997. "Growth and Terms of Trade: A North-South Macroeconomic Framework," Journal of Macroeconomics, Elsevier, vol. 19(1), pages 117-133, January.
  8. Mark Setterfield, 2010. "Endogenous Growth: A Kaldorian Approach," Working Papers 1001, Trinity College, Department of Economics.
  9. Reinhart, Carmen & Wickham, Peter, 1994. "Commodity Prices: Cyclical Weakness or Secular Decline?," MPRA Paper 8173, University Library of Munich, Germany.
  10. André Varella Mollick & Jo�o Ricardo Faria & Pedro H. Albuquerque & Miguel A. León-Ledesma, 2008. "Can globalisation stop the decline in commodities' terms of trade?," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 683-701, September.
  11. Sarkar, Prabirjit, 2001. "Technical Progress and the North-South Terms of Trade," Review of Development Economics, Wiley Blackwell, vol. 5(3), pages 433-43, October.
  12. Ardeni, Pier Giorgio & Wright, Brian, 1992. "The Prebisch-Singer Hypothesis: A Reappraisal Independent of Stationarity Hypotheses," Economic Journal, Royal Economic Society, vol. 102(413), pages 803-12, July.
  13. Zanias, George P., 2005. "Testing for trends in the terms of trade between primary commodities and manufactured goods," Journal of Development Economics, Elsevier, vol. 78(1), pages 49-59, October.
  14. Bruton, H.J., 1998. "A Reconsideration of Import Substitution," Center for Development Economics 156, Department of Economics, Williams College.
  15. Dutt, Amitava Krishna, 1996. "Southern Primary Exports, Technological Change and Uneven Development," Cambridge Journal of Economics, Oxford University Press, vol. 20(1), pages 73-89, January.
  16. John S.L. McCombie, 2011. "Criticisms and defences of the balance-of-payments constrained growth model: some old, some new," PSL Quarterly Review, Economia civile, vol. 64(259), pages 353-392.
  17. Darity, William A, Jr, 1990. "The Fundamental Determinants of the Terms of Trade Reconsidered: Long-run and Long-period Equilibrium," American Economic Review, American Economic Association, vol. 80(4), pages 816-27, September.
  18. Setterfield, Mark, 1997. "'History versus Equilibrium' and the Theory of Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 21(3), pages 365-78, May.
  19. Henry J. Bruton, 1998. "A Reconsideration of Import Substitution," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 903-936, June.
  20. José Antonio Ocampo & María Angela Parra, 2004. "The commodity terms of trade and their strategic implications for development," International Trade 0403001, EconWPA.
  21. A. P. Thirlwall, 1997. "Reflections on the Concept of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 377-385, April.
  22. Jose Antonio Ocampo & Maria Angela Parra, 2004. "The Terms Of Trade For Commodities In The Twentieth Century," International Trade 0402006, EconWPA.
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