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Trend in the international terms of trade between primary producers and manufacturers

Author

Listed:
  • Harry Bloch

    (University of Tasmania)

  • David Sapsford

    (Lancaster University)

Abstract

Movements in the terms of trade between primary producers and manufacturers are analyzed using a model that introduces the influence of relative wage movements in the primary and manufacturing sectors as well as the influence of mark-up pricing in manufacturing. The model is estimated using data on the relative price of primary commodities and manufactured goods in international trade during the post-World War II (WWII) period. A decline in wages of primary-sector workers relative to those of workers in manufacturing and a rise in manufacturing margins are both estimated to have reduced the terms of trade for primary producers. However, expansion of manufacturing output is estimated to have a positive impact that has more than offset the negative influences during periods of moderate to strong growth.

Suggested Citation

  • Harry Bloch & David Sapsford, 1996. "Trend in the international terms of trade between primary producers and manufacturers," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(1), pages 53-67.
    • Handle: RePEc:wly:jintdv:v:8:y:1996:i:1:p:53-67
    DOI: 10.1002/(SICI)1099-1328(199601)8:1<53::AID-JID245>3.0.CO;2-X
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    References listed on IDEAS

    as
    1. R. J. Ball & E. B. A. St Cyr, 1966. "Short Term Employment Functions in British Manufacturing Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 33(3), pages 179-207.
    2. Malcolm C. Sawyer, 1983. "Business Pricing and Inflation," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-03166-5, October.
    3. Grilli, Enzo R & Yang, Maw Cheng, 1988. "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," The World Bank Economic Review, World Bank, vol. 2(1), pages 1-47, January.
    4. Harry Bloch & David Sapsford, 1991. "Postwar Movements in Prices of Primary Products and Manufactured Goods," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(2), pages 249-266, December.
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    Cited by:

    1. Hadass, Yael S & Williamson, Jeffrey G, 2003. "Terms-of-Trade Shocks and Economic Performance, 1870-1940: Prebisch and Singer Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 629-656, April.
    2. José Antonio Ocampo & María Angela Parra, 2004. "The commodity terms of trade and their strategic implications for development," International Trade 0403001, University Library of Munich, Germany.
    3. Tilton, John E., 2013. "The terms of trade debate and the policy implications for primary product producers," Resources Policy, Elsevier, vol. 38(2), pages 196-203.

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