Hostname: page-component-78c5997874-lj6df Total loading time: 0 Render date: 2024-11-03T01:39:11.731Z Has data issue: false hasContentIssue false
  • English
  • Français

The terms of trade for commodities since the mid-19th century*

Published online by Cambridge University Press:  01 March 2010

José Antonio Ocampo  and
Mariángela Parra-Lancourt
José Antonio Ocampo
Affiliation:
Columbia University, International Affairs Building, New York, NY 10027, [email protected]
Mariángela Parra-Lancourt
Affiliation:
United Nations, Department of Economic and Social Affairs, New York, NY 10017, [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper shows that there was an improvement in the barter terms of trade for non-fuel commodities vs. manufactures in the late 19th and early 20th centuries, followed by significant deterioration over the rest of the 20th century. However, the decline over most of the 20th century was neither continuous nor was it distributed evenly among different commodity groups. The far-reaching changes that the world economy underwent around 1920 and again around 1979 led to a stepwise deterioration which, over the long term, was reflected in roughly a halving of real commodity prices. Tropical agriculture fared the worst, whereas minerals had the best performance, with non-tropical agriculture in an intermediate situation. The increase experienced in the first decade of the 21st century may be the beginning of a long-term upward trend, but it is too soon to tell.

Resumen

Este ensayo muestra que hubo una mejoría en los términos de intercambio de trueque de los productos básicos a fines del siglo XIX y comienzos del XX, seguido por un deterioro significativo en el resto del siglo XX. Sin embargo, el deterioro durante la mayor parte del siglo XX no fue continuo ni se distribuyó en forma homogénea en diferentes grupos de productos. Los cambios de largo alcance que experimentó la economía mundial en torno a 1920 y nuevamente a 1979 se reflejaron en una caída escalonada, que a largo plazo redujo los precios reales de productos básicos aproximadamente a la mitad. La agricultura tropical experimentó el peor desempeño y la minería el mejor, con la agricultura no tropical en una situación intermedia. El incremento de los precios que se experimentó en la primera década del siglo XXI puede ser el inicio de una nueva fase de alza de larga duración, pero es demasiado temprano para saberlo.

Keywords

primary commodities, terms of trade, Prebisch–Singer hypothesis, structural breaksF12, 013, Q00Productos básicos, términos de intercambio, hipótesis de Prebisch–Singer, cambios estructurales
Type
Articles/Artículos
Information
Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 28 , Issue 1 , March 2010 , pp. 11 - 43
Copyright
Copyright © Instituto Figuerola de Historia y Ciencias Sociales, Universidad Carlos III de Madrid 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Ardeni, P. G., Wright, B. (1992): «The Prebisch-Singer Hypothesis: A Reappraisal Independent of Stationarity Hypothesis». The Economic Journal, 102 (413), pp. 803-812.CrossRefGoogle Scholar
Bairoch, P. (1989): «Le Trois Révolutions Agricoles du Monde Développé: Rendements et Productivité de 1800 a 1985». Annales ESC 2, March-April, pp. 317-353.Google Scholar
Blattman, C.; Hwang, J., Williamson, J. (2004): «The Impact of the Terms of Trade on Economic Development in the Periphery, 1870-1939: Volatility and Secular Change». NBER Working Paper 10600. National Bureau of Economic Research.CrossRefGoogle Scholar
Bleaney, M., Greenaway, D. (1993): «Long-run Trends in the Relative Price of Primary Commodities and in the Terms of Trade of Developing Countries». Oxford Economic Papers, 45 (3), pp. 349-363.CrossRefGoogle Scholar
Cashin, P., McDermott, J. (2002): «The Long-run Behaviour of Commodity Prices: Small Trends and Big Variability». IMF Staff Papers, 49 (2).CrossRefGoogle Scholar
Cochrane, J. H. (1988): «How Big is the Random Walk in GNP?». Journal of Political Economy, 96.CrossRefGoogle Scholar
Cuddington, J. T. (1992): «Long-run Trends in 26 Primary Commodity Prices: A Disaggregated Look at the Prebisch-Singer Hypothesis». Journal of Development Economics, 39 (2).CrossRefGoogle Scholar
Cuddington, J. T., Urzúa, C. M. (1989): «Trends and Cycles in the Net Barter Terms of Trade: A New Approach». Economic Journal, 99, pp. 426-442.CrossRefGoogle Scholar
Cuddington, J. T., Wei, S. J. (1998): «An Empirical Analysis of Real Commodity Price Trends: Aggregation, Model Selection and Implications», in H. Singer, N. Hatti, and R. Tandon (eds), Export Led Versus Balanced Growth in the 1990s, New World Order Series, vol. 13. Delhi: BR Publishing Corporation.Google Scholar
Cuddington, J. T.; Ludema, R. L., Jayasuriya, S. A. (2002): «Prebisch-Singer Redux». Documento de trabajo, no. 140. Santiago, Chile, Central Bank.Google Scholar
Findlay, (1980): «The Terms of Trade and Equilibrium Growth in the World Economy». American Economic Review, 70 (3), pp. 291-299.Google Scholar
Findlay, R. (1981): «The Fundamental Determinants of the terms of Trade», in S. Grassman, and E. Lündberg (eds), The World Economic Order: Past and Prospects. London: Macmillan, pp. 425-457.CrossRefGoogle Scholar
Grilli, E. R., Yang, M. C. (1988): «Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What Long Run Shows». The World Bank Economic Review, 2 (1), pp. 1-47.CrossRefGoogle Scholar
Hadaas, Y. S., Williamson, J. G. (2003): «Terms of Trade Shocks and Economic Performance 1870-1940: Prebisch and Singer Revisited». Economic Development and Cultural Change, 51 (3), pp. 629-656.CrossRefGoogle Scholar
Harvey, D.; Kellard, N.; Madsen, J., Wohar, M. (2008). «The Prebisch-Singer Hypothesis: Four Centuries of evidence». Paper presented at the 13th Annual Conference on Econometric Modelling in Africa. Available at http://www.africametrics.org/conference-papers08.html. Forthcoming in the Review of Economics and Statistics.Google Scholar
Johnson, H. G. (1954): «Increasing Productivity, Income-price Trends and the Trade Balance», reprinted in H. G. Johnson (1967), International Trade and Economic Growth. Cambridge, Mass.: Harvard University Press.Google Scholar
Kaplinsky, R. (2005): Globalization, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge: Polity Press.Google Scholar
Kaplinsky, R. (2006): «Revisiting the Revisited Terms of Trade: Will China Make a Difference?». World Development, 34 (6), pp. 981-995.CrossRefGoogle Scholar
Kellard, N.Wohar, M. E. (2006): «On the Prevalence of Trends in Primary Commodity Prices». Journal of Development Economics, 79 (1), pp. 146-167.CrossRefGoogle Scholar
León, J., Soto, R. (1995a): «Términos de Intercambio en la América Latina: Una Cuantificación de la Hipótesis de Prebisch y Singer». El Trimestre Económico, 62 (246), pp. 71-99.Google Scholar
León, J., Soto, R. (1995b): «Structural Breaks and Long Run Trends in Commodity Prices». Policy Research Working Paper no. 1406. Washington, D.C.: Policy Research Department, World Bank.Google Scholar
Lewis, A. (1978): Growth and Fluctuations, 1870-1913. Cambridge, UK: George Allen and Unwin.Google Scholar
Lumsdaine, R. L., Papell, D. (1997): «Multiple Trend Breaks and the Unit-Root Hypothesis». Review of Economics and Statistics, 79 (2), pp. 212-218.CrossRefGoogle Scholar
Maddison, A. (1991): Dynamic Forces in Capitalist Development: A Long-Run Comparative View. New York: Oxford University Press.Google Scholar
Maddison, A. (1995): Monitoring the World Economy 1820-1992. Paris: OECD Development Centre.Google Scholar
Maizels, A. (1992): «The Commodity Price Collapse of the 1980s», in D. Greenaway and C. W. Morgan (eds), The Economics of Commodity Markets. The International Library of Critical Writings in Economics. Reprinted in 1999. Cheltenham: Edward Elgar, pp. 231-264.Google Scholar
Mayer, J. (2003): «The Fallacy of Composition: A Review of the Literature». UNCTAD Discussion Papers no. 166, February.Google Scholar
Mitchell, B. R. (1973): «Statistical Appendix 1700-1914», in C. M. Cipolla (ed.), The Fontana Economic History of Europe: The Emergence of Industrial Societies 4 (2), pp. 738-820. London: Collins/Fontana Books, Ch. 12.Google Scholar
Ocampo, J. A. (1984): Colombia y la economía mundial, 1830-1910. Bogotá: Siglo XXI Editores and Fedesarrollo.Google Scholar
Ocampo, J. A. (1986): «New Developments in Trade Theory and LDCs». Journal of Development Economics, 22 (1), pp. 129-170.CrossRefGoogle Scholar
Ocampo, J. A. (1993): «Terms of Trade and Center–Periphery Relations», in O. Sunkel (ed.), Development from Within: Toward a Neostructuralist Approach for Latin America. Boulder and London: Lynne Rienner Publishers, pp. 333-360.CrossRefGoogle Scholar
Ocampo, J. A., Parra, M. (2003): «The Terms of Trade for Commodities in the Twentieth Century». CEPAL Review 79, April, pp. 7-35.Google Scholar
Ocampo, J. A., Parra, M. (2006): «The Commodity Terms of Trade and Their Strategic Implications for Development», in K. S. Jomo (ed.), Globalization Under Hegemony: The Changing World Economy. New Delhi: Oxford University Press, pp. 164-194.Google Scholar
Ocampo, J. A., Parra, M. (2007): «The Continuing Relevance of the Terms of Trade and Industrialization Debates», in E. Pérez, and M. Vernengo (eds), Ideas, Policies and Economic Development in the Americas. New York: Routledge Studies in Economic Development, pp. 157-182.Google Scholar
Perron, P. (1989): «The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis». Econométrica, 57, pp. 1361-1401.CrossRefGoogle Scholar
Perron, P. (1997): «Further Evidence on Breaking Trend Functions in Macroeconomic Variables». Journal of Econometrics, 80 (2), pp. 357-385.CrossRefGoogle Scholar
Pfaffenzeller, S.; Newbold, P.Rayner, A. (2007): «A Short Note on Updating the Grilli and Yang Commodity Price Index». The World Bank Economic Review, 21 (1), pp. 151-163.CrossRefGoogle Scholar
Powell, A. (1991): «Commodity and Developing Countries Terms of Trade: What Does the Long-run Show?». The Economic Journal, 101, pp. 1485-1496.CrossRefGoogle Scholar
Prebisch, R. (1950): «The Economic Development of Latin America and its Principal Problems». New York: United Nations. Reprinted in 1962 in Economic Bulletin for Latin America, 7 (1), pp. 1-23.Google Scholar
Razmi, A., Blecker, R. (2008): «Developing Country Exports of Manufactures: Moving up the Ladder to escape the Fallacy of Composition?». Journal of Development Studies, 44 (1), pp. 21-48.CrossRefGoogle Scholar
Scandizzo, P. L., Diakosawas, D. (1987): «Instability in the Terms of Trade of Primary Commodities, 1900-1982». FAO Economic and Social Development Paper, no. 64.Google Scholar
Singer, H. W. (1950): «US Foreign Investment in Underdeveloped Areas: The Distribution of Gains Between Investing and Borrowing Countries». American Economic Review, Papers and Proceedings, no. 40 (2), pp. 473-485.Google Scholar
Taylor, L. (1983): Structuralist Macroeconomics: Applicable Models for the Third World. New York: Basic Books.Google Scholar
United Nations, Department of Economic Affairs (1949): «Relative Prices of Exports and Imports of Under-developed Countries: A Study of Post-war Terms of Trade between Under-developed and Industrialized countries». New York, S: 1949.II.B.3, December.Google Scholar
Williamson, J. G. (2006): Globalization and the Poor Periphery Before 1950. Cambridge: MIT Press.CrossRefGoogle Scholar
World Bank (2009): Global Economic Prospect 2009: Commodities at the Crossroads. Washington D.C.: The World Bank.Google Scholar