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

Vol. 36 No. 1 (2016)

Jan-Mar / 2016
Published March 1, 2020
PDF-English
PDF-English

How to Cite

Azevedo Araujo, Ricardo. 2016. “Assessing the Dynamics of Terms of Trade Inamodelof Cumulative Causation Andstructural Change”. Brazilian Journal of Political Economy 36 (1), 150-67. https://doi.org/10.1590/0101-31572016v36n01a09.

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

Ricardo Azevedo Araujo
Departamento de Economia, Universidade de Brasilia (UFB), Brasília, DF – Brasil.
Brazilian Journal of Political Economy, Vol. 36 No. 1 (2016), Jan-Mar / 2016, Pages 150-167

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.


Keywords: structural economic dynamics, terms of trade