EC 045 Lecture Notes - Lecture 15: World-Systems Theory, Price Controls, Commodity Market

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L. a specialized in exports of primary products, economies grew rapidly in late. Limited production of manufactures, mostly textiles and processed food and beverages. Golden age of export led growth model ended with first world war. Drastic reduction of inflows of capital from europe. Great depression of 1929, major shock that severely affected world economy and l. a economies. Price of exports of primary commodities declined sharply > causes devaluation of l. a currency: great depression marks birth of structuralism and dependency school. Structuralism: center/ periphery different economic structures, periphery economies based on commodity exports. Center economies on manufactured products: long-run deterioration of the terms of trade. More commodities needed over time to buy same amount of manufactured products. L. a not benefiting from international trade: technical innovations faster in the production of manufactured goods: fast accumulation of capital in center and slow accumulation of capital in the periphery, industrialization necessary to change the periphery structure of economy.

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