The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change

Christopher Blattman, Jason Hwang and Jeffrey Gale Williamson ()

No 10600, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Most countries in the periphery specialized in the export of just a handful of primary products for most of their history. Some of these commodities have been more volatile than others, and those with more volatile prices have grown slowly relative both to the industrial leaders and to other primary product exporters. This fact helps explain the growth puzzle noted by Easterly, Kremer, Pritchett and Summers more than a decade ago: that the contending fundamental determinants of growth institutions, geography and culture exhibit far more persistence than do the growth rates they are supposed to explain. Using a new panel database for 35 countries, this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939. Volatility was much more important for accumulation and growth than was secular change. Additionally, both effects were asymmetric between Core and Periphery, findings that speak directly to the terms of trade debates that have raged since Prebisch and Singer wrote more than 50 years ago. The paper also investigates one channel of impact, and finds that foreign capital inflows declined steeply where commodity prices were volatile.

JEL-codes: F1 N10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2004-07
Note: DAE ITI

Downloads: (external link)
http://www.nber.org/papers/w10600.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html.

Related works:
Working Paper: The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change (2004)
Working Paper: The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:nbr:nberwo:10600

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10600
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc
Address: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Contact information at EDIRC.
Series data maintained by ().