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Terms Of Trade And Welfare For A Developing Economy With An Imperfectly Competitive Sector

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  • Partha Sen

    (Delhi School of Economics)

Abstract

The effect of terms of trade economy on the welfare of a small open economy is analyzed. It exports a homogeneous good and imports some brands of the differentiated good. It also produces some brands of the differentiated good which are not traded. A terms of trade deterioration causes resources to move to the non-traded, import-competing sector. The economy's income rises and the price index for the differentiated good falls, resulting in higher welfare. This accords well with the experience of developing economies to East and South-east Asia.

Suggested Citation

  • Partha Sen, 1997. "Terms Of Trade And Welfare For A Developing Economy With An Imperfectly Competitive Sector," Working papers 45, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:45
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    Cited by:

    1. Xiaokai Yang & Dingsheng Zhang, 1999. "International Trade and Income Distribution," CID Working Papers 18A, Center for International Development at Harvard University.
    2. Syed Tehseen Jawaid & Mariya Ahmad Qureshi & Samra Ali, 2021. "Does immiserizing growth exist? Evidence from world’s top trading nations," Journal of Chinese Economic and Foreign Trade Studies, Emerald Group Publishing Limited, vol. 14(2), pages 124-148, January.
    3. Trofimov, Ivan D., 2018. "Income terms of trade and economic convergence: Evidence from Latin America," MPRA Paper 87598, University Library of Munich, Germany.
    4. Jeffrey Sachs & Xiaokai Yang & Dingsheng Zhang, 2005. "Globalization, Dual Economy, And Economic Development," World Scientific Book Chapters, in: An Inframarginal Approach To Trade Theory, chapter 16, pages 349-382, World Scientific Publishing Co. Pte. Ltd..
    5. Yang, X. & Sachs, J.D. & Zhang, D., 1999. "Trade Pattern and Economic Development when Endogenous and Exogenous Comparative Advantage Coexist," Papers 3, Chicago - Graduate School of Business.
    6. Jeffrey Sachs & Xiaokai Yang & Dingsheng Zhang, 2005. "Pattern Of Trade And Economic Development In A Model Of Monopolistic Competition," World Scientific Book Chapters, in: An Inframarginal Approach To Trade Theory, chapter 10, pages 185-221, World Scientific Publishing Co. Pte. Ltd..
    7. Ivan Trofimov, 2021. "Income terms of trade and economic convergence: Evidence from Latin America," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(2), pages 41-67, June.
    8. Shinsuke Ikeda, 2009. "Export‐ and Import‐Specific Habit Formation," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 709-718, November.
    9. Fabrice Nzepang & Saturnin Bertrand Nguenda Anya, 2022. "Effects of ICTs on the Terms of Trade of Sub-Saharan African Economies," Journal of African Trade, Springer, vol. 9(1), pages 107-119, December.

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