Prices Of Primary Products Research Articles

Terms of trade during the first globalization: new evidence, new results

AbstractBy analyzing a new dataset of terms of trade covering the whole world during the “first globalization” (1800–1913), this article finds that trends of terms of trade varied significantly, both within the periphery and the core, and were mainly driven by import prices. Volatility declined because price spikes became less frequent and export prices became increasingly stable. We find little evidence of de-industrialization. Consistent with our trends, prices of primary products, similarly to those of manufactures, were falling and so was their volatility. These results sit uneasily with the view that terms of trade played a crucial role in holding back the development of peripheral countries before World War I.

The external debt‐inflation nexus in Egypt

Egypt has a long history with external financing dating back to the 19th century. Nevertheless, Egypt's external debt has been mounting remarkably in the past few years. This paper examines the impact of Egypt's external debt on its price level, a topic ignored by researchers. Nonetheless, as inflation is a hydra‐headed problem, this paper develops several models which incorporate fiscal and monetary policies besides other inflation‐inducing internal and external factors using monthly data extending from 2000M1 to 2020 M1. By employing ARDL cointegration analyses on monthly time series variables and using Egypt's wholesale price index to account for inflation, the paper concludes that external debt raises prices both in the short and long runs. Moreover, money supply and interest rate were also found to increase prices in the long run long despite decreasing them in the short run. Finally, upsurges in the international prices of primary products stimulate domestic prices both in the short and long terms, while depreciation in the local currency aggravates inflation in the short and long terms as well. As external debt raises inflation and affects many other inflation‐inducing factors indirectly, the paper concludes that reducing Egypt's external debt may help in curbing Egypt's inflation.

Sequential Monte Carlo Filters with Parameters Learning for Commodity Pricing Models

In this article, an estimation methodology based on the sequential Monte Carlo algorithm is proposed, thatjointly estimate the states and parameters, the relationship between the prices of futures contracts and the spot prices of primary products is determined, the evolution of prices and the volatility of the historical data of the primary market (Gold and Soybean) are analyzed. Two stochastic models for an estimate the states and parameters are considered, the parameters and states describe physical measure (associated with the price) and risk-neutral measure (associated with the markets to futures), the price dynamics in the short-term through the reversion to the mean and volatility are determined, while that in the long term through markets to futures. Other characteristics such as seasonal patterns, price spikes, market dependent volatilities, and non-seasonality can also be observed. In the methodology, a parameter learning algorithm is used, specifically, three algorithms are proposed, that is the sequential Monte Carlo estimation (SMC) for state space modelswith unknown parameters: the first method is considered a particle filter that is based on the sampling algorithm of sequential importance with resampling (SISR). The second implemented method is the Storvik algorithm [19], the states and parameters of the posterior distribution are estimated that have supported in low-dimensional spaces, a sufficient statistics from the sample of the filtered distribution is considered. The third method is (PLS) Carvalho’s Particle Learning and Smoothing algorithm [31]. The cash prices of the contracts with future delivery dates are analyzed. The results indicate postponement of payment, the future prices on different maturity dates with the spot price are highly correlated. Likewise, the contracts with a delivery date for the last periods of the year 2017, the spot price lower than the prices of the contracts with expiration date for 12 and 24 months is found, opposite occurs in the contracts with expiration date for 1 and 6 months.

COVID‐19 and Food Security in Fiji: The Reinforcement of Subsistence Farming Practices in Rural and Urban Areas

<scp>COVID</scp>‐19 and Food Security in Fiji: The Reinforcement of Subsistence Farming Practices in Rural and Urban Areas

The European Union’s Trade Relations with Brazil in 2004–2015

Brazil’s trade with the EU has been increasing, reflecting the growing role of Brazil in the world economy in 2004–2008. However, since the global economic crisis the growth rates have slowed down and bilateral trade flows have been declining. During 2004–2015, the EU trade balance with Brazil was mostly deficit and trade patterns were similar to each partner’s general merchandise structure. The paper contains an analysis of EU-Brazil trade flows and balance as well as points to main factors contributing to trade development. Apart from economic conditions in the EU and Brazil, main factors affecting bilateral trade were: world prices of primary products and protectionist tendencies in Brazil’s trade policy. There is still much growth potential when it comes to bilateral EU–Brazil trade, but whether it will be realized depends on improving trade rules and negotiating more favourable access to each other’s markets, especially to Brazil’s market.

English

Nowadays, export diversification has become one of the most important economic objectives of development strategies in the developing countries. For various reasons, such as preventing instability in export prices of primary products in global markets and consequently, reducing fluctuations in exchanges of them compared with industrial goods, producing dynamic benefits resulted from exporting various goods and increasing productivity of production factors may increase the rate of economic growth. The main purpose of this study is to investigate the role of export diversification in the economic growth of some selected developing countries over the period of 2000-2009. Accordingly, the relationship among GDP per capita, physical capital stock, labour force, and export diversification index was studied using the generalized method of moments (GMM). The results showed that reducing export specialization and, consequently, increasing export diversification have significantly positive effect on the rate of economic growth of these countries. Key words: Export diversification, economic growth, developing countries, GMM.

Export instability and economic growth in Nigeria: a time series analysis

The primary products and commodities provide food and livelihood for families and communities, are sources of raw material, and export earnings for many governments in sub-Saharan African (SSA) countries and most especially, Nigeria. However, over the years, global prices of primary products and commodities have been very volatile, with serious implications for economic growth. As a response, this study investigates the impact of export instability on economic growth in Nigeria using time series data from 1970q1 to 2011q4 and an econometric approach that addresses the problem of non-stationarity. As a departure from previous studies, the paper uses an instability measure that varies over time and a relatively large data sample size. The results show that export instability has negative effects on economic growth and also on investment.

The terms of trade debate and the policy implications for primary product producers

The terms of trade debate initiated by Raul Prebisch and Hans Singer over 60 years ago continues to this day and is unlikely to be resolved soon. However, even if Prebisch and Singer are right and the terms of trade of countries exporting primary products are falling, to suggest that these countries should diversify away from the production of mineral commodities and other primary products, as many have done, may be poor policy advice, encouraging countries to abandon a promising source of wealth with which to foster economic development.This is because the prices of most goods are correlated with their production costs. If the prices of primary products are falling but a country's production costs are declining more, the profits, producer surplus, and wealth that the country realizes are rising, increasing the benefits it reaps from its primary product production and trade. Alternatively, when prices are rising but a country's costs are rising faster, the benefits it enjoys are falling notwithstanding higher primary product prices.While it has long been recognized that falling costs can conceivably offset the adverse effects of lower prices and declining terms of trade for primary product producers, much of the available literature either ignores this likely possibility or contends in fact changes in relative product prices do not reflect changes in their production costs.

The future of the WTO: some comments on the Sutherland Report

Three times since its founding in 1948, the GATT/WTO has turned to outside experts for help in finding solutions to pressing issues confronting the multilateral trading system. In 1957 the Contracting Parties decided to create a panel of three (later four) internationally recognized experts in international trade and finance to consider trends in world trade, andin particular the failure of the trade of the less developed countries to develop as rapidly as that of industrialized countries, excessive short-term fluctuations in prices of primary products, and widespread resort to agricultural protection.

The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa

Specialization in primary product exports reduces growth, but why? Adverse trends in, and the high variance of, primary product prices are possible explanations. The impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub-Saharan African countries over 1980–1995. Growth is negatively affected by terms of trade instability, and investment by real exchange rate instability. Both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated.

Whither the terms of trade? An elaboration of the Prebisch-Singer hypothesis

Movements in the prices of primary products and manufactured goods are analysed using a model that introduces differences in wage and price determination between primary production and manufacturing. Wages and prices in primary production are treated as competitively determined, while prices and wages in manufacturing are determined by mark-up pricing and union-employer bargaining, respectively. The objective is to capture the influence of structural differences between manufacturing and primary production on the terms of trade between industrialised and developing worlds as discussed in the seminal contributions to the development literature by Raul Prebisch and Hans Singer. The model is estimated using price and wage data from the post-World War II period. Support is found for the Prebisch-Singer hypothesis; however, our estimates suggest that, during periods of particularly rapid manufac turing growth, there have been intervals of net improvement in the terms of trade of primary producers.

Some estimates of Prebisch and Singer effects on the terms of trade between primary producers and manufacturers

Movements in the prices of primary products and manufactured goods are analyzed using a model based on the seminal contributions of Raul Prebisch and Hans Singer. Estimates are obtained from a system of equations using post-WWII data on prices, wages and manufacturing mark-ups, with the results providing evidence of the negative effects on the terms of trade of primary producers suggested by both Prebisch and Singer. These effects more than offset positive effects arising from diminishing returns in primary production, thereby providing an explanation for the negative net trend in the terms of trade of primary producers in the postwar period.

LONG-RUN TRENDS IN THE RELATIVE PRICE OF PRIMARY COMMODITIES AND IN THE TERMS OF TRADE OF DEVELOPING COUNTRIES

The long-run trend in the ratio of primary product prices to those of manufactured goods is examined in the context of an error correction model. The ratio was approximately stable from 1925 to 1980, after which there was a significant drop. However, the separate component series (metals, food, nonfood 'soft'commodities) display marked dissimilarities. This casts doubt on generalizations about the relative price of primary products as a group and helps to explain disagreement amongst previous authors. The relationship between relative prices and the terms of trade of developing countries is examined and the policy implications discussed. Copyright 1993 by Royal Economic Society.

Postwar Movements in Prices of Primary Products and Manufactured Goods

Postwar Movements in Prices of Primary Products and Manufactured Goods

Le Yen et les échanges extérieurs du Japon

Measured in dollars, the Japanese current account surplus started to decline in 1989. But this is misleading : the actual reversal of the trend started in 1987, when this surplus, measured in yen, started to decline. This is due to a contraction of the trade balance which appears in every bilateral trade account. During the period 1987-1990, the prices of primary products declined while the terms of trade of manufactured goods were almost stable despite the wide fluctuations of the exchange rate. Consequently, the contraction of the current account surplus is due to the movements affecting the volumes of manufactured goods : decelerating exports, accelerating imports. Changes in the dollar-yen exchange rate largely explain those volume movements despite a very active behaviour of Japanese exporting firms on their profit margins. This behaviour is particularly noticeable for equipment goods, and still shows in sectors confronted with quantitative restrictions in importing countries. External trade of manufactured goods is increasingly split between high value added exports and low value-added imports. This is consistent with the long-term trend of appreciation followed by the yen and by direct investments overseas. Direct investments overseas account for only a small fraction of capital outflows. Global outflows largely excède the current account surplus, which explains part of the yen depreciation in 1988-1989. The current account surplus will probably register a small growth in the coming quarters despite the surge of oil prices. But it will eventually drift downwards as the surplus in manufactured goods will diminish, while the yen will follow its appreciation trend.

The genesis of import substitution in Latin America

The process of import substitution that got underway in Latin America in the train of the Great Depression was principally a spontaneous response to the radical deterioration of the international prices of primary products, to the breakdown of the multilateral international trading system (and the collapse of world trade) and to the abrupt reversal of resource transfers.

EXPORT-PROMOTING TRADE STRATEGY

T-he question of the wisdom of adopting an trade strategy has recurred in the history of the developing countries. Development economics was born in an atmosphere of export pessimism at the end of the World War II. By the late 1960s, however, the remarkable success of the few economies that pursued export-promoting (EP) rather than import-substituting (Is) policies swung the weight of academic opinion behind the EP strategy. Aiding this process were numerous academic findings from research projects around the world, which investigated both these EP successes and the failures of the is countries.1 The debt crisis of the 1980s, the sluggish world economy, and the continuing depression of primary product prices have revived export pessimism afresh. It is time again, therefore, to examine the old and new arguments that question the wisdom of the EP strategy. The early postwar arguments in support of export pessimism are briefly reviewed below, before the precise content of an EP strategy is stated. The article then considers a few salient lessons that have emerged in the studies on the advantages of the EP strategy and examines several new sources of skepticism concerning export-prom- oting trade policies. The contrasts between the old (postwar) pessi- mism and the new pessimism prevalent today are then exploited briefly to draw a central policy lesson for the developing countries, especially in regard to the multilateral trade negotiations (MTN).2

What Stopped the Inflation? Unemployment or Commodity Prices?

The main object of this paper is to argue that most of the deceleration of inflation in the OECD countries in general (including Britain) that took place between i980 and I982 should be attributed not to the direct impact of higher unemployment on the labour market but to the fall in 'commodity' (i.e. primary product) prices from I980 to I982, following their very sharp rise (accompanying the second 'oil shock') between I978 and I980. This led to a dramatic turn-round of about 50-60 % in the prices of primary products imported into the OECD countries from the rest of the world (and from other OECD countries), which, in turn, can account for the deceleration of about 20-25 % in the import prices for the average industrialised country. And our econometric estimates show that the pace of wage inflation is closely correlated with import prices. By contrast, our estimates for a variety of model specifications and choice of data do not show statistically significant correlations between aggregate unemployment and wage inflation.' We have not attempted to establish statistically that the turn-round in commodity prices was caused mainly by the strength and duration of the postI979 recession in the industrialised countries as a whole, but like most commentators we assume that this is the case. Given this assumption, therefore, our results imply that the recession in the industrialised world did not as is widely believed slow down the inflation by acting directly on the labour market (e.g. by crushing the unions or bringing a 'new breath of realism' into wage negotiations). Instead it worked by inducing a collapse of commodity prices (or, in the case of oil, inducing a slight fall by comparison with the preceding sharp rise). Insofar as our results are valid there are various obvious implications for some central topical economic debates. First, if there is no stable direct relationship between unemployment within any country and its own rate of wage inflation then there would be no 'NAIRU' and no clearly identifiable Phillips curve as some other investigators have found. Hence, debates as to whether and how far individual economies have unemployment rates above or below their NAIRUs and so on are irrelevant. In the Conclusions we summarise what seem to be the main policy implications for individual countries. But, secondly, insofar as levels of demand in the industrialised countries taken as a whole influence commodity prices which feed back on wage inflation via

Towards better nutrition: lip service or a realistic fight?

Progress towards the objective of the World Food Conference of 1974 that "no child should go to bed hungry" is reviewed. The low market price of primary products keeps developing countries poor. Yet in these countries industry rather than agriculture has been supported by governments. All regions are increasing total food production but population growth threatens to offset this increase. In some areas there is decrease in food production per head of population. In many countries the social situation of women affects the nutrition of families. Other causes of malnutrition are discussed and future policies are recommended.

Trends, cycles and asymmetries in the terms of trade of primary commodities from developed and less developed countries

The paper examines the Prebisch hypothesis that primary product prices relative to the price of manufacturers fall during cyclical downturns by more than they rise during cyclical upturns and that this is an independent explanation of the secular tendency of the net barter terms of trade to move against primary commodities. An important distinction is made between primary products exported by less developed countries and those exported by developed countries. The greater cyclicality of primary product prices, and the long-run deterioration in their terms of trade since 1954 are confirmed, but there is little support for the Prebisch thesis that primary product prices relative to manufacturers are move sensitive on the downswing than the upswing.