World Trade in Agricultural Commodities and the Terms of Trade with Industrial Goods

Abstract

It is now more than twenty years since Prebisch, Singer and Myrdal announced the thesis that the poverty of the poor countries is largely the result of bad and worsening terms of trade between their primary exports and their manufactured imports. The remedy recommended by these authors was liberation from dependence on primary and especially agricultural exports through import-substituting industrialisation behind protective barriers. The idea appealed to the newly independent governments whose ideology inspired them to do the opposite to what the colonial powers had done. Colonialism meant primary production (mines and plantations) and exports: so independence came to stand for secondary or manufacturing production and import substitution. Table 8.1 shows the four options.

I am indebted to Michael Sharpston for help with the statistical tables and for valuable comments.