Question

4. 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

INTRODUCTION TO EXPORT PESSIMISM

During 1950's many economists like prebisch. myrdal, singer and nurkse recognized that the exports of LDC's during the 20th century were quite weak in contrast to buoyancy of exports during the 19th century.

THE OLD EXPORT PESSIMISM

In the 1950's and 1060's many newly developing countries embraced a strategy of import subsituting industrialisation (ISI). In large part, the ISI strategy was based on a pessimistic view regarding primary product exports.

TERM OF TRADE (TOT)

Term of trade represents the ratio between a country's export prices and its import prices. The ratio is calculated by dividing the price of the exports by the price of the imports and multiplying the result by 100.

FACTORS AFFECTING TERMS OF TRADE

1.Scarcity the number of goods available for trade is one such factor. The more goods a vendor has available for sale, the more goods it will likely sell, and the more goods that vendor can buy using capital obtained from sales.

2. The size and quality of goods also affect TOT large and higher quality goods will likely cost more. If goods sell for a higher price, a seller will have additional capital to purchase more goods.

Most countries in Latin America and the caribbean are struggling to escape what economists label "The middle income trap".

There are many interesting tendencies in Latin American historiography. There's been a rediscovery of culture, including political culture, in Latin American historigraphy over the past two decades. 19th century is the most problematic for Latin American terms of trade.

FORM OF DEPENDENCY OR INTERNATIONAL

1. Dependency theory argues that under development as experienced in Latin America and elsewhere is the direct result of capital intervention, ratherthan a condition of " lacking" development or investment.

2. International tourism has become very important to several developing countries as a major source of foreign exchange earnings for their economic development. Results show that international tourism arrivals into the Latin America and caribbean region would increase from 51.21 million in 2004 to between 87.58 million and 100.03 million by the year 2020.