Where Does Unequal Exchange Occur?
As the chapters surveying the debate on Unequal Exchange have shown, the discussion tends to centre on the very moment when goods cross the North-South border. This might be misleading. Starting from the sharing of value added and defining equivalence as double factoral terms of trade of 1, permits us to analyse who suffers under Unequal Exchange, i.e. to see where as well as to what extent non-equivalence occurs. This can, of course, only be done if we discard the pet of traditional foreign trade theory, the country as a solid unit. Recently this view was also attacked by Brecher and Bhagwati (1981), who showed with the traditional tools of neo-classic analysis that an advantage or net-gain for a country can easily be split into a big gain for some and a relatively big loss for others. If, for example, profits accrue to a TNC within a periphery country which repatriates these profits immediately, looking at country units and — as is usually done — the balance of trade, is simply misleading.
KeywordsInformal Sector Producer Price Transfer Price Informal Economy World System
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