Question

Discuss the reasons behind the “export pessimism” of the dependency writers. Outline what are a country’s barter terms-of-trade and what may be the factors affecting their decline or increase, referring to the ideas of Raul Prebisch. Note which periods of economic history were the most problematic for Latin American terms-of-trade. Finally, discuss two other forms of dependency or international economic factors possibly hurting Latin America.

Answer 1

Exports pessimism is the view that developing countries'efforts to expand exports leads to decrease in their terms of trade (TOT). The main reason for export pessimism
is the Prebisch-Singer Hypothesis.

Barter terms of trade is the ratio of indiex of export prices to indiex of import prices.
According to the Raul Prebish (Prebisch-Singer Hypothesis), with the economic evolution of the world, primary commodities (export basket of developing economies) get cheaper vis-a-vis manufactured products (export basket of developed world). This leads to decline in barter terms of trade for the comparatively less developed economy / ies like the Latin American economy.

The periods post the World war-1 and world War-2 could be regarded as the most problemtice for Latin American terms of trade due to substantial fall in exports of agricultural and mining commodities during that period.

Political dependency and deployment of piecemeal liberalistion without adequate
adaptation to local ground realities are the two key factors hurting Latin American Economy.