An Austrian critique of the Prebisch-singer theory of the deterioration in the terms of trade. Issue 4 (31st January 2020)

• Record Type: Journal Article
• Authors: Futerman, Alan G.; Block, Walter E.
• Is Part Of: Journal of financial economic policy. Volume 12:Issue 4(2020)
• Page Start: 721
• Page End: 735
• Publication Date: 2020-01-31
• Subjects: International trade -- Terms of trade -- Argentina -- Prebisch -- Singer -- Agriculture -- Allocative efficiency; F19; Economic policy -- Periodicals; Finance -- Periodicals; 332.05
• DOI: 10.1108/JFEP-09-2019-0181
• Languages: English
• ISSNs: 1757-6385

Abstract

Abstract : Purpose: This study aims to offer a critique of the theory of the deterioration in terms of trade, developed by Raúl Prebisch and Hans Singer. Design/methodology/approach: As an example of the theory's shortcomings, the case of Argentina's import substitution model is analyzed. Findings: This study demonstrates how a misunderstanding of the influence of price variability in international trade may lead to the mistaken conclusion that protectionist measures must be enforced to achieve growth and prosperity. Originality/value: This is the first study that criticizes the Prebisch-Singer theory of the deterioration in the terms of trade from an Austrian economics.