Terms of Trade Movements and the Global Economic Crisis: Implications for the Asia-Pacific Region

CRAE Working Paper No. 200908

15 Pages Posted: 26 Nov 2010

See all articles by Harry Bloch

Harry Bloch

Curtin University of Technology - Curtin Business School - School of Economics and Finance

David Sapsford

University of Liverpool Management School (ULMS) - Economics Division

Date Written: November 15, 2009

Abstract

Dramatic changes in the relative prices of goods in international trade have accompanied, and indeed preceded, the global crisis. These changes are reflected in the terms of trade of individual countries and in the relative prices of goods within those countries. Asia-Pacific countries are particularly affected by the changes in relative prices as they have been at the core of the increasing globalisation of production and distribution systems. An analysis of the causes and effects of the relative price changes is developed based on applying the analysis of business cycles developed by Joseph Schumpeter. Schumpeter's analysis emphasizes innovation and structural change, particularly creative destruction, which impart uneven development on the economy and can foster financial crises. By applying Schumpeter's analysis the current crisis is put in the context of long-wave development of the capitalist system, which leads to predictions about the likely path of price and output changes over the medium term of the next decade or two.

Keywords: Terms of trade, Global economic crisis, Schumpeter, Primary commodity prices, Business cycles

JEL Classification: D24, Q33, Q41

Suggested Citation

Bloch, Harry and Sapsford, David, Terms of Trade Movements and the Global Economic Crisis: Implications for the Asia-Pacific Region (November 15, 2009). CRAE Working Paper No. 200908, Available at SSRN: https://ssrn.com/abstract=1715356 or http://dx.doi.org/10.2139/ssrn.1715356

Harry Bloch (Contact Author)

Curtin University of Technology - Curtin Business School - School of Economics and Finance ( email )

Curtin University
GPO Box U 1987
Perth, 6845
Australia
+61 8 9266 2035 (Phone)
+61 8 9266 3026 (Fax)

David Sapsford

University of Liverpool Management School (ULMS) - Economics Division ( email )

Eleanor Rathbone Building
Bedford Street North
Liverpool L69 7ZA
United Kingdom
+44 (0)151 795 3701 (Phone)
+44 (0)151 795 3001 (Fax)

HOME PAGE: http://www.liv.ac.uk/management/

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