Sarkar-Singer Hypothesis Essay -- International Trade

Sarkar-Singer Hypothesis Introduction Since terms of trade deterioration hypothesis was proposed by Prebisch and Singer in 1950, comparative advantage was doubted. Due to the export structure of developing countries (DCs) is dominated by primary products, and the export structure of industrialised countries (ICs) dominated by manufactured products; they compared primary products export of DCs and manufactured products export of ICs, and indicated that the terms of trade trend to deteriorate over time. This hypothesis is supported by many studies, such as Grilli and Yang (1998) and Spraos (1980); therefore the widening gap like existed. This hypothesis is confronted the traditional view, international trade and specialisation may not be better off. The Prebisch-Singer hypothesis also impacts on the trade policy of the majority of DCs to become inward looking. However, many studies appeal that the defected of Prebisch-Singer hypothesis, Sarkar and Singer analysis is the important appeal. Due to Singer (1958) views that the export structure of the DCs was dominated by primary products; export structure of the ICs by the manufactured products. Therefore, theearly studies use the terms of trade between primary products and manufactures as a proxy. Sarkar (1986) express that the growth of manufactured sectors, however, Singer (1987) proposes that even the change in the commodity composition of exports, the disadvantages in DCs lead the deterioration be continuous. Sarkar and Singer (1991) focuses on this subject, examines the impact of the shift in the commodity composition of exports of DCs. They proposed that the changes in commodity composition of exports are the important factor, as the primary sectors of DCs have a lower rat... ...ent, Vol. 19, No. 4, Page 333-340 Singer, H. W. (1950) The distribution of gains between investing and borrowing countries, American Economic Review, Vol. 40, No. 2, Page 473-485 Singer, H. W. (1958) Comment, Review of Economics and Statistics, Vol. 40, Page87-88 Singer, H. W. (1987) Terms of trade in John Eatwell, Murray Milgate and Peter Newman (Eds), The New Palgrave: A Dictionary of Economics, London: Macmillan, Page 626-628 Singer H. W. (1998) The Terms of Trade Fifty Years Later – Convergence and Divergence, The South Letter (30) Sproas, J. (1980) The Statistical Debate on the Net Barter Terms of Trade Between Primary Commodities and Manufactures, Economic Journal, Vol. 90, Page 107-128 United Nations Conference on Trade and Development (2005) Trade and Development Report Chapter III: Evolution of the Terms of Trade and its Impact on Developing Countries