Recent Movements In Agriculture'S Terms Of Trade In Pakistan (Notes & Comments)

The purpose of this study is to add five years' data to astudy under¬taken some years ago by S. Mushtaq Hussain and myself [4].The original study developed a fairly complete set of price weights andprice indices for manu¬factured and agricultural commodities in Pakistanfrom 1951/52 to 1963/64, and analyzed the movements in the net barterterms of trade of the domestic, agricultural and manufacturing sectors.The results showed that the terms of trade had been turned againstagriculture by the trade-restricting policies of the government in theearly 1950's and that the subsequent relatively slow growth ofagriculture and rapid growth of manufacturing had resulted in a movementof domestic relative prices more favourable to agriculture over the late1950's and early 1960's. The earlier movement against agriculture andthe later improvement in agriculture's terms of trade were morepronounced in East than in West Pakistan. A subsequent study [3]compared the terms of trade agriculture received in Pakistan and theterms of trade it might have received had the agricultural sector beenable to trade directly with the rest of the world without going throughthe government's exchange-control mechanism. From the latter study, itwas clear that even though there had been an improvement inagriculture's terms of trade from the mid-1950's to the early 1960's,agriculture in both provinces was being "squeezed" relative to the termsof trade it might have received in the rest of the world. East-Pakistanfarmers received 55 to 60 cents in manufactured goods per dollar ofmarketed commodities, while West-Pakistan farmers received