Trends In Terms Of Trade Research Articles

A review of methodological issues relating to the estimation of terms of trade and trends in terms of trade between agricultural and non-agricultural sectors of the Indian economy since 1950’S

The movements of intersectoral terms of trade (TOT) in India since independence is characterized by periodical shifts in favor and against agriculture. The intersectoral terms of trade has been favorable during 1967- 1968 to 1977-1978 and during the post reforms period. But the indicators of performance and growth of the sector has been showing unimpressive trends in the post reforms period. While considering the slow pace of reforms in the country, it is also observed that policy changes in agriculture were still slower. This paper analyses the impacts of the swings in terms of trade (favorable and unfavorable to agriculture) on the performance of agricultural sector in the country. It was revealed that while the favorable swing in terms of trade has caused increased private gross fixed capital formation in agriculture, it has not led to any perceptible improvement in agricultural production or growth rate of agriculture gross domestic product (GDP). While the favorable TOT during 1967-68 to 1977-78 is speculated to be the result of government price support mechanism, this paper argues that the favorable TOT in the post reforms period is a result of decline in the aggregate crop output rather than government policies. Key words: Terms of trade (TOT), agricultural growth rate, gross domestic product (GDP), government policies.

Macroeconomic Policies and Agricultural Terms of Trade, Bangladesh, 1952–2005

Agricultural prices in Bangladesh have had a tendency to rise at a faster rate than industrial prices since the early 1950s. The resulting rising trend in the agricultural terms of trade has been pronounced since the mid-1980s when Bangladesh introduced IMF- and World Bank-supported deregulatory economic reforms. This rising trend in the agricultural terms of trade is inconsistent with the Prebisch-Singer thesis in the context of domestic economy, which suggests a secular deterioration in the terms of trade for primary products vis-à-vis manufactured products. It is, however, consistent with the view of classical economists who saw the possibility of an upward trend in the terms of trade for agricultural products (food) because of diminishing returns in agriculture. In fact, the classical idea of the rising terms of trade for primary products makes sense in a land-constrained growing economy with increasing population, such as Bangladesh, which remained semi-closed until the mid-1980s. This article reviews macroeconomic policies in Bangladesh since the 1950s, examines the time-series properties of agricultural prices, industrial prices and the agricultural terms of trade and draws inference on the issue whether the agricultural sector was squeezed systematically by turning the terms of trade against agriculture for industrialisation of the country.

Commodity terms of trade and individual countries' net barter terms of trade: Is there an empirical relationship?

This paper examines the statistical relationship between aggregate commodity terms of trade and the net barter terms of trade of 66 non-oil developing countries. Stationarity of the estimated long-run equation is tested for each country using Engle–Granger ADF tests. Four different commodity terms of trade series are examined. For more than half the sample a stationary long-run relationship is detected. The responsiveness of the country terms of trade to the overall index varies considerably between countries. These findings suggest that the long-term trend in the overall terms of trade is still relevant to developing countries today. Copyright © 1999 John Wiley & Sons, Ltd.

Trends in the Terms of Trade and Revealed Comparative Advantage: An Indian Experience

This paper attempts to examine linear and exponential trend in India's terms of trade at aggregate level as well at disaggregate level. The exponential trend in terms of trade has been examined through TSP model, as well as through DSP model. Its observed that India did not experience deterioration in its net barter terms of trade during the period under considerotion. The terms of trade is observed to be trendless for all commodity groups except beverages and tobacco and animal and vegetable oils and fats. The index of revealed comparative advantage has been estimated far each section of RITC group. The index of revealed camporative advantage has improved in case of chemicals and miscellaneous manufactured products, whereas, deterioration is observed for manufactured good, chiefly clossified by materials. The negative impact of revealed comparative advantage is observed on terms of trade of a country.

Trends in the Terms of Trade of Primary Commodities, 1900-1982: The Controversy and Its Origins

Primary commodity markets have offered an opportunity for much economic debate on a number of key issues. First, secularly declining terms of trade of primary commodities are used to explain the widening gap between developing (LDCs) and developed countries (DCs). Second, they are regarded as a contributing factor to the creation of a structural condition of unequal exchange between a "dominating" industrial center and a "dominated" agrarian periphery. And third, they are thought to be a source of instability, often causing financial vulnerability to foreign exchange equilibria and fragility to international market institutions.

A New Contribution in the Statistical Debate Over Trends in the Net Barter Terms of Trade Between Primary Commodities and Manufactures

This paper presents some new evidence in the statistical debate surrounding the Prebisch­ Singer hypothesis of a declining long-run trend in the net barter terms of trade between primary prod­ ucts and manUfactures. The paper analyses data from a variety of sources covering the period up to and including the early 1980s and finds evidence of a structural instability in the underlying growth path. Once appropriate action is taken to allow for this instability, some strong empirical support for the declining trend hypothesis emerges.

Trends in Terms of Trade of LDCs

The controversial Prebisch thesis in international economics of development asserts that (i) less‐developed countries (LDCs) experience a long‐run deterioration in their terms of trade with developed countries (DCs), and (ii) these experiences are the cause of the ever‐widening gap in their per capita incomes with DCs. By surveying the controversy and discussing the connection between trends in terms of trade and international economic inequality, this paper attempts to disprove some widely held notions derived from misinterpretations and from broad generalisations with indirect inferences. We conclude that there is need for case studies; in order to evaluate and select appropriate policy options.