Chapter 4 Globalization, Trade in Middle Products, and Relative Prices

Ulrich Kohli

A chapter in Contemporary and Emerging Issues in Trade Theory and Policy, 2008, pp 65-89 from Emerald Group Publishing Limited

Abstract: Nearly all international trade takes place in middle products, rather than in finished goods as it is assumed in most models of international trade theory. Recognition of this fact has some far-reaching consequences for the measurement of real value added, real domestic income, and productivity, and it brings forward the role of a number of related, yet distinct, key price ratios: the terms of trade, the real exchange rate, and the trading gains. Production theory, rather than consumer theory, is therefore the appropriate setting for analyzing issues such as openness, trade imbalances, and income distribution.

Keywords: Globalization; middle products; imbalances; terms of trade; real exchange rate; trading gains; income distribution (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:fegzzz:s1574-8715(08)04004-9

DOI: 10.1016/S1574-8715(08)04004-9

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