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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 375.93

-1.8%

Nov 14 4:00 PM EST

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To: Moominoid who wrote (36978)	7/15/2008 7:01:39 PM
From: elmatador	of 217780

The Classical Law of Rising Terms of Trade of Primary Products The classical economists believed that the terms-of-trade of primary products would show long-term improvement vis-à-vis manufactures due to the operation of the law of diminishing returns in primary production and the law of increasing returns in manufactures. The policy implication of this classical proposition is that a primary-producing country need not industrialize to enjoy the gains from technical progress taking place in manufactures; free play of international market forces will distribute the gains from the industrial countries to the primary-producing countries through the higher prices of their exports of primary products relative to the prices of their imports of manufactures (that is, the terms-of-trade will move in favor of primary-product exporting countries). www.geocities.com/prabirjit_sarkar/ps.doc The Prebisch-Singer Hypothesis counter argue that. The way I look at it, closed economies of LATAM (Prebisch was Argentinean) created the conditons against the "free play of international market forces will distribute the gains from the industrial countries to the primary-producing countries". That created lots of profits for the protected industries (Getulio in Brazil Peron in Argentina) and the state-owned enterprises, but worked against the "distribution of the gains from the industrial countries to the primary-producing countries". Today, we are seeing the distribution happening and this points to the structural chanage that I keep talking about.

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