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

Harry Bloch and David Sapsford
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David Sapsford: Lancaster University, Postal: Lancaster University

Journal of International Development, 1996, vol. 8, issue 1, 53-67

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.

Date: 1996
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Persistent link: https://EconPapers.repec.org/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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