Abstract
With one exception, we will in this paper use the simplest and most available concept of the terms of trade:
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(1)
The ratio between the prices of two commodities, or of two groups of commodities, that may be exchanged against each other. This is often called the commodity terms of trade; Taussig called it the ‘net barter terms of trade’.
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The classical concept is different. It looked to the real quantity of factors exchanged for each other through the intermediation of commodities — in Marshall, the labour in G-bales exchanged for the labour in E-bales. The classical concept is thus the double factoral terms of trade, or the commodity terms of trade times the reciprocal of changes in technical coefficients for exports and imports.
I am indebted to Mr. M. C. Madhavan for diligent and imaginative work far beyond the line of duty, in the preparation of the data and charts of this study.
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Notes
Cf. H. Myint: ‘The Gains from International Trade and the Backward Countries’, Rev. of Econ. Stud., Vol. XXII (2), 1954–55, pp. 131, 132.
Cf. Viner, Studies in the Theory of International Trade, pp. 558–65; Haberler, International Trade, 159–66; C. Iversen, International Capital Movements, Copenhagen and London (Oxford Press), 1936, pp. 337–42; W. W. Rostow, ‘The Terms of Trade in Theory and Practice’, The Economic History Review, 2nd series, Vol. iii, No. 1, 1950, pp. 1–15.
Economic Journal, 1912, ‘Official Papers, “Return of Estimated Value of Foreign Trade of United Kingdom at Prices of 1900”’, p. 630. Quoted in W. W. Rostow, ‘The Terms of Trade in Theory and Practice’, The Economic History Review, 2nd series, Vol. iii, No. 1, 1950, p. 14.
T. Morgan,’ The Long-Run Terms of Trade Between Agriculture and Manu-facturing’, Econ. Develop, and Cult. Change, Oct. 1959, pp. 1–23.
From the International Monetary Fund’s Balance of Payments Yearbook, 1958, quoted in Ely Devons, ‘World Trade in Invisibles’. Lloyd’s Bank Review, April 1961, pp. 37 et seq.
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© 1963 International Economic Association
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Morgan, T. (1963). Trends in Terms of Trade, and Their Repercussions on Primary Producers. In: Harrod, R., Hague, D. (eds) International Trade Theory in a Developing World. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08458-6_3
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