The North-South Terms of Trade Debate: A Re-Examination
Progress in Development Studiesa, Vol. 1, No. 4, 2001
Contrary to the classical proposition, the works of Prebisch and Singer launched the controversial hypothesis of long-term decline in the terms of trade of primary products vis-à-vis manufactures and a corresponding decline in the terms of trade of the South vis-à-vis the North.
The present study traces the origin and evolution of the hypothesis and reviews the related statistical debate. It concludes that the empirical base of the Prebisch-Singer hypothesis is much stronger than it appeared in earlier decades. Reviewing some of the North-South models, the study also finds theoretical support for the Prebisch-Singer hypothesis.
Keywords: commodity prices, North-South trade, Prebisch-Singer hypothesis, terms of trade
JEL Classification: F00, O19, O50Accepted Paper Series
Date posted: October 3, 2007
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