An Austrian critique of the Prebisch-singer theory of the deterioration in the terms of trade

Alan G. Futerman and Walter E. Block

Journal of Financial Economic Policy, 2020, vol. 12, issue 4, 721-735

Abstract: Purpose - This study aims to offer a critique of the theory of the deterioration in terms of trade, developed by Raúl Prebisch and Hans Singer. Design/methodology/approach - As an example of the theory’s shortcomings, the case of Argentina’s import substitution model is analyzed. Findings - This study demonstrates how a misunderstanding of the influence of price variability in international trade may lead to the mistaken conclusion that protectionist measures must be enforced to achieve growth and prosperity. Originality/value - This is the first study that criticizes the Prebisch-Singer theory of the deterioration in the terms of trade from an Austrian economics.

Keywords: International trade; Terms of trade; Argentina; Prebisch; Singer; Agriculture; Allocative efficiency; F19 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfeppp:jfep-09-2019-0181

DOI: 10.1108/JFEP-09-2019-0181

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