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Income terms of trade and economic convergence: Evidence from Latin America

Ivan Trofimov ()
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Ivan Trofimov: KYS Business School, Malaysia

Journal of Economic Development, 2021, vol. 46, issue 2, 41-67

Abstract: The paper considers the effects of income terms of trade (ToT) on GDP per capita in Latin American economies and examines whether improvement in the income ToT contributes to the stochastic convergence between respective economies and the US. It is shown that in the majority of the economies, income ToT had positive effects on the level of GDP per capita. The stochastic convergence was documented in Dominican Republic, and Uruguay. The positive effects of income ToT increase on GDP per capita convergence were documented only in Uruguay. The growth of the volume of exports played a key role in the process, while the effects on the part of net barter ToT were insignificant. In both economies, the improvement in the income ToT relative to the US level played a positive role in convergence.

Keywords: Terms of Trade; Convergence; Prebisch-Singer Thesis (search for similar items in EconPapers)
JEL-codes: C22 F02 F14 N76 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.35866/caujed.2021.46.2.002

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