IDEAS home Printed from https://ideas.repec.org/p/unm/unumer/2010022.html
   My bibliography  Save this paper

From Trends in Commodities and Manufactures to Country Terms of Trade

Author

Listed:
  • Ziesemer, Thomas

    (UNU-MERIT, and Maastricht University)

Abstract

The debate about the Prebisch-Singer thesis has focussed on primary commodities with some extensions to manufactures. As we think that the link between the terms of trade and longrun development, growth and convergence is the ability of exports to enhance investment through importing capital goods we analyse trends in country terms-of-trade. We use two data sets. We find that for the poor countries the terms of trade of goods and services are falling at a rate that is less negative than for net-barter terms of trade and those found earlier for primary commodities.

Suggested Citation

  • Ziesemer, Thomas, 2010. "From Trends in Commodities and Manufactures to Country Terms of Trade," MERIT Working Papers 2010-022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2010022
    as

    Download full text from publisher

    File URL: https://unu-merit.nl/publications/wppdf/2010/wp2010-022.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alexis Habiyaremye & Thomas H. W. Ziesemer, 2012. "Export demand elasticities and productivity as determinants of growth: estimates for Mauritius," Applied Economics, Taylor & Francis Journals, vol. 44(9), pages 1143-1158, March.
    2. Bloch, Harry & Sapsford, David, 2000. "Whither the Terms of Trade? An Elaboration of the Prebisch-Singer Hypothesis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(4), pages 461-481, July.
    3. Mohamed Saadi, 2012. "Export sophistication and the terms of trade of the developing and emerging countries," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(5), pages 623-642, October.
    4. Ziesemer, Thomas, 2011. "What Changes Gini Coefficients of Education? On the dynamic interaction between education, its distribution and growth," MERIT Working Papers 2011-053, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Matthias G. Lutz, 1999. "Commodity terms of trade and individual countries' net barter terms of trade: Is there an empirical relationship?," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(6), pages 859-870.
    6. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    7. André Varella Mollick & João Ricardo Faria & Pedro H. Albuquerque & Miguel A. León-Ledesma, 2008. "Can globalisation stop the decline in commodities' terms of trade?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 683-701, September.
    8. Maurice J. G. Bun & Frank Windmeijer, 2010. "The weak instrument problem of the system GMM estimator in dynamic panel data models," Econometrics Journal, Royal Economic Society, vol. 13(1), pages 95-126, February.
    9. Dennis Epple & Bennett T. Mccallum, 2006. "Simultaneous Equation Econometrics: The Missing Example," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 374-384, April.
    10. 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 349-363, July.
    11. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    12. Corsetti, Giancarlo & Martin, Philippe & Pesenti, Paolo, 2007. "Productivity, terms of trade and the `home market effect'," Journal of International Economics, Elsevier, vol. 73(1), pages 99-127, September.
    13. David I. Harvey & Neil M. Kellard & Jakob B. Madsen & Mark E. Wohar, 2010. "The Prebisch-Singer Hypothesis: Four Centuries of Evidence," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 367-377, May.
    14. Powell, Andrew, 1991. "Commodity and Developing Country Terms of Trade: What Does the Long Run Show?," Economic Journal, Royal Economic Society, vol. 101(409), pages 1485-1496, November.
    15. Habiyaremye, Alexis & Ziesemer, Thomas, 2006. "Absorptive Capacity and Export Diversification in Sub-Saharan African Countries," MERIT Working Papers 2006-030, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    17. Alexis Habiyaremye, 2013. "Imported Capital Goods and Manufacturing Productivity: Evidence from Botswana's Manufacturing Sector," South African Journal of Economics, Economic Society of South Africa, vol. 81(4), pages 581-604, December.
    18. Headey, Derek, 2011. "Rethinking the global food crisis: The role of trade shocks," Food Policy, Elsevier, vol. 36(2), pages 136-146, April.
    19. Cuddington, John T, 2010. "Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch-Singer hypothesis," Resources Policy, Elsevier, vol. 35(2), pages 72-76, June.
    20. Prasad Bidarkota & Mario J. Crucini, 2000. "Commodity Prices and the Terms of Trade," Review of International Economics, Wiley Blackwell, vol. 8(4), pages 647-666, November.
    21. World Bank, 2009. "World Development Indicators 2009," World Bank Publications - Books, The World Bank Group, number 4367.
    22. Marcelo Soto, 2009. "System GMM Estimation With A Small Sample," UFAE and IAE Working Papers 780.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    23. Cuddington, John T & Urzua, Carlos M, 1989. "Trends and Cycles in the Net Barter Terms of Trade: A New Approach," Economic Journal, Royal Economic Society, vol. 99(396), pages 426-442, June.
    24. Aleksandra Parteka & Massimo Tamberi, 2013. "What Determines Export Diversification in the Development Process? Empirical Assessment," The World Economy, Wiley Blackwell, vol. 36(6), pages 807-826, June.
    25. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    26. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 369-405.
    27. Paul Cashin & Catherine Pattillo, 2006. "African terms of trade and the commodity terms of trade: close cousins or distant relatives?," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 845-859.
    28. Bilge Erten, 2011. "North-South terms-of-trade trends from 1960 to 2006," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(2), pages 171-184.
    29. Peter Gustafsson & Paul Segerstrom, 2010. "Trade Liberalization and Productivity Growth," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 207-228, May.
    30. Olivier Cadot & Céline Carrère & Vanessa Strauss-Kahn, 2013. "Trade Diversification, Income, And Growth: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 790-812, September.
    31. Sapsford, David & Balasubramanyam, V. N., 1994. "The long-run behavior of the relative price of primary commodities: Statistical evidence and policy implications," World Development, Elsevier, vol. 22(11), pages 1737-1745, November.
    32. Jawaid, Syed Tehseen & Raza, Syed Ali, 2012. "Effects of terms of trade and its volatility on economic growth in India," MPRA Paper 38998, University Library of Munich, Germany.
    33. Kaplinsky, Raphael, 2006. "Revisiting the revisited terms of trade: Will China make a difference?," World Development, Elsevier, vol. 34(6), pages 981-995, June.
    34. André Varella Mollick & João Ricardo Faria & Pedro H. Albuquerque & Miguel A. León-Ledesma, 2008. "Can globalisation stop the decline in commodities' terms of trade?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 683-701, September.
    35. Ocampo, José Antonio & Parra-Lancourt, Mariángela, 2010. "The terms of trade for commodities since the mid-19th century," Revista de Historia Económica / Journal of Iberian and Latin American Economic History, Cambridge University Press, vol. 28(1), pages 11-43, March.
    36. Okui, Ryo, 2009. "The optimal choice of moments in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 151(1), pages 1-16, July.
    37. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    38. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    39. Sarkar, Prabirjit & Singer, H. W., 1991. "Manufactured exports of developing countries and their terms of trade since 1965," World Development, Elsevier, vol. 19(4), pages 333-340, April.
    40. Konstantin M. Wacker, 2011. "Do multinationals beat down developing countries' export prices? The impact of FDI on net barter terms of trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 211, Ibero-America Institute for Economic Research.
    41. Prema-Chandra Athukorala, 2000. "Manufactured exports and terms of trade of developing countries: Evidence from Sri Lanka," Journal of Development Studies, Taylor & Francis Journals, vol. 36(5), pages 89-104.
    42. Hadass, Yael S & Williamson, Jeffrey G, 2003. "Terms-of-Trade Shocks and Economic Performance, 1870-1940: Prebisch and Singer Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 629-656, April.
    43. Ziesemer, Thomas, 1998. "Creation and Destruction of Comparative Advantage by Public Investment in the Transport Infrastructure of Transit Economies and by Environmental Taxes," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    44. Ziesemer, Thomas HW, 1994. "Economic Development and Endogenous Terms-of-Trade Determination: Review and Reinterpretation of the Prebisch-Singer Thesis," MPRA Paper 54864, University Library of Munich, Germany.
    45. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    46. Matthias G. Lutz, 1999. "A General Test of the Prebisch–Singer Hypothesis," Review of Development Economics, Wiley Blackwell, vol. 3(1), pages 44-57, February.
    47. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    48. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    49. Mansfield, Edward D. & Reinhardt, Eric, 2008. "International Institutions and the Volatility of International Trade," International Organization, Cambridge University Press, vol. 62(4), pages 621-652, October.
    50. Broda, Christian, 2004. "Terms of trade and exchange rate regimes in developing countries," Journal of International Economics, Elsevier, vol. 63(1), pages 31-58, May.
    51. Jagdish Bhagwati & Arvind Panagariya & T. N. Srinivasan, 1998. "Lectures on International Trade, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522470, April.
    52. Prebisch, Raúl, 1950. "The economic development of Latin America and its principal problems," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29973, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    53. Prabirjit Sarkar, 2001. "The North-South terms of trade debate: a re-examination," Progress in Development Studies, , vol. 1(4), pages 309-327, October.
    54. Hans Singer, 1999. "Beyond terms of trade-convergence and divergence," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(6), pages 911-916.
    55. repec:bla:reviec:v:8:y:2000:i:4:p:647-66 is not listed on IDEAS
    56. Bennett T. McCallum, 1993. "Unit roots in macroeconomic time series: some critical issues," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 13-44.
    57. 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 803-812, July.
    58. Rati Ram, 2004. "Trends in Developing Countries’ Commodity Terms-of-Trade since 1970," Review of Radical Political Economics, Union for Radical Political Economics, vol. 36(2), pages 241-253, June.
    59. repec:bla:econom:v:37:y:1970:i:148:p:373-85 is not listed on IDEAS
    60. Bleaney, Michael & Greenaway, David, 2001. "The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 65(2), pages 491-500, August.
    61. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Feilan & Wong, Wing-Keung & Reivan Ortiz, Geovanny Genaro & Shraah, Ata Al & Mabrouk, Fatma & Li, Jianfeng & Li, Zeyun, 2023. "Economic analysis of sustainable exports value addition through natural resource management and artificial intelligence," Resources Policy, Elsevier, vol. 82(C).
    2. Konstantin M. Wacker, 2011. "The Impact of Foreign Direct Investment on Developing Countries’ Terms of Trade," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).
    3. Wacker, Konstantin M. & Großkurth, Philipp & Lakemann, Tabea, 2014. "Terms of Trade, Foreign Direct Investment, and Development: A Case of Intra-Asian “Kicking Away the Ladder”?," Working Papers on Regional Economic Integration 122, Asian Development Bank.
    4. Konstantin M. Wacker, 2011. "The Impact of Foreign Direct Investment on Developing Countries' Terms of Trade," WIDER Working Paper Series wp-2011-006, World Institute for Development Economic Research (UNU-WIDER).
    5. Ziesemer, Thomas, 2022. "Linking the BOPC growth model with foreign debt dynamics to the goods and labour markets," MERIT Working Papers 2022-029, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Jerzy Dudzinski & Renata Knap, 2021. "New Phenomena in the Price Movement of Manufactured Goods in Contemporary International Trade," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 1047-1056.
    7. Konstantin M. Wacker, 2011. "Do multinationals beat down developing countries' export prices? The impact of FDI on net barter terms of trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 211, Ibero-America Institute for Economic Research.
    8. Darrin Downes & Tarron Khemraj, 2019. "Foreign Exchange Pressure in Barbados: Monetary Approach or Monetary Dependence?," Review of Political Economy, Taylor & Francis Journals, vol. 31(2), pages 159-177, April.
    9. Konstantin M. Wacker, 2016. "Do Multinationals Deteriorate Developing Countries' Export Prices? The Impact of FDI on Net Barter Terms of Trade," The World Economy, Wiley Blackwell, vol. 39(12), pages 1974-1999, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Trofimov, Ivan D., 2018. "Income terms of trade and economic convergence: Evidence from Latin America," MPRA Paper 87598, University Library of Munich, Germany.
    2. José Antonio Ocampo & María Angela Parra, 2004. "The commodity terms of trade and their strategic implications for development," International Trade 0403001, University Library of Munich, Germany.
    3. Konstantin M. Wacker, 2016. "Do Multinationals Deteriorate Developing Countries' Export Prices? The Impact of FDI on Net Barter Terms of Trade," The World Economy, Wiley Blackwell, vol. 39(12), pages 1974-1999, December.
    4. Ghoshray, Atanu & Kejriwal, Mohitosh & Wohar, Mark E., 2011. "Breaking Trends and the Prebisch-Singer Hypothesis: A Further Investigation," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 120387, European Association of Agricultural Economists.
    5. Bilge Erten, 2010. "Industrial Upgrading and Export Diversification: A Comparative Analysis of Economic Policies in Turkey and Malaysia," Working Papers id:2778, eSocialSciences.
    6. André Varella Mollick & João Ricardo Faria & Pedro H. Albuquerque & Miguel A. León-Ledesma, 2008. "Can globalisation stop the decline in commodities' terms of trade?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 683-701, September.
    7. Thomas Ziesemer, 2016. "The Impact of Development Aid on Education and Health: Survey and New Evidence for Low‐income Countries from Dynamic Models," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(8), pages 1358-1380, November.
    8. Konstantin M. Wacker, 2011. "Do multinationals beat down developing countries' export prices? The impact of FDI on net barter terms of trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 211, Ibero-America Institute for Economic Research.
    9. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
    10. Cuddington, John T. & Ludema, Rodney & Jayasuriya, Shamila A, 2002. "Prebisch-Singer Redux," Working Papers 15857, United States International Trade Commission, Office of Economics.
    11. Luis Eduardo Arango & Fernando Arias & Luz Adriana Flórez, 2008. "Trends, Fluctuations, and Determinants of Commodity Prices," Borradores de Economia 521, Banco de la Republica de Colombia.
    12. Osvaldo Lagares, 2016. "Capital, Economic Growth and Relative Income Differences in Latin America," Discussion Papers 16/03, Department of Economics, University of York.
    13. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
    14. Hany Fahmy, 2021. "A Reappraisal of the Prebisch-Singer Hypothesis Using Wavelets Analysis," JRFM, MDPI, vol. 14(7), pages 1-17, July.
    15. Eva Barteková & Thomas H. W Ziesemer, 2019. "The impact of electricity prices on foreign direct investment: evidence from the European Union," Applied Economics, Taylor & Francis Journals, vol. 51(11), pages 1183-1198, March.
    16. Ghoshray, Atanu, 2011. "A reexamination of trends in primary commodity prices," Journal of Development Economics, Elsevier, vol. 95(2), pages 242-251, July.
    17. Goya, Daniel, 2020. "The exchange rate and export variety: A cross-country analysis with long panel estimators," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 649-665.
    18. Prabirjit Sarkar, 2001. "The North-South terms of trade debate: a re-examination," Progress in Development Studies, , vol. 1(4), pages 309-327, October.
    19. Alan V. Deardorff, 2016. "What Do We (and Others) Mean by "The Terms of Trade"?," Working Papers 651, Research Seminar in International Economics, University of Michigan.
    20. Hadass, Yael S & Williamson, Jeffrey G, 2003. "Terms-of-Trade Shocks and Economic Performance, 1870-1940: Prebisch and Singer Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 629-656, April.

    More about this item

    Keywords

    Prebisch-Singer thesis; country terms-of-trade; long-run development;
    All these keywords.

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:unumer:2010022. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ad Notten (email available below). General contact details of provider: https://edirc.repec.org/data/meritnl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.