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Trend in the international terms of trade between primary producers and manufacturers
Author(s) -
Bloch Harry,
Sapsford David
Publication year - 1996
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/(sici)1099-1328(199601)8:1<53::aid-jid245>3.0.co;2-x
Subject(s) - manufacturing sector , primary sector of the economy , relative price , economics , offset (computer science) , wage , international trade , business , international economics , labour economics , tertiary sector of the economy , monetary economics , economy , computer science , programming language
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.