Neoclassical Logic

Forstater, Mathew ForstaterM at umkc.edu
Thu Mar 15 11:12:19 PST 2001


but the statistical debate on the net barter terms of trade shows Prebisch-Singer to be valid (see David Sapsford's work, in particular). while initially couched in terms of types of products, primary vs. manufactures, P-S was later reformulated in terms of differing structural characteristics of 'first' and 'third' world economies, including structural features close to those emphasized by Lewis. So I think one can still argue that technical progress in the periphery tends to translate into lower relative prices for core imports and technical progress in the core tends to result in higher profits (and sometimes higher relative wages) in the core. comments?

From: Brad DeLong [mailto:delong at econ.Berkeley.EDU]

Lewis's model was built with the late nineteenth century in mind. Lewis was trying to figure out why a lot of technology transfer to the periphery hadn't raised real wages in places like Nigeria and Brazil. His conclusion was that outmigration from China and India had pushed wages down in Asian migrant-recipient regions--and the fact that Asian migrant-recipient regions were producing the same tropical primary products as the rest of the tropical periphery kept living standards very low everywhere in the tropical periphery, so that all productivity gains were captured by first-world consumers.

The model looks very promising for explaining what was going on up until 1914 or so. But the big migration flows are then choked off...



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