ECO100Y1 Chapter 10: International Trade
Document Summary
Chapter 12: international trade theory and development strategy: Weak export performance of many ldcs is due to the low income and price elasticities of their products, and declining terms of trades (prebisch-singer thesis). International trade agreements must level the playing field for the poor. Risky markets and unstable prices for the ldcs primary products exports. The structure of a country affects how it uses the transfers of technological, economics, social and other transfers through trade. The prebisch-singer thesis (1950) argued that terms of trade for ldcs are worsened in the long-term due to a combo of low income and price elasticities of demand. What a country chooses to specialize in producing depends on the price and cost structure of that product in the country. Comparative advantage at a lower relative unit cost. Real-world variations from what trade theory assumes: factor prices are not really at market-clearing rate in ldcs, quality and quantity varies across countries and ldcs.
