Terms of Trade and International Trade Problems of Ldcs: International Economics

This book has examined the role and behaviour of terms of trade of a developing economy in context of a liberalised trade and investment regime. The study has focused on both the theoretical and empirical aspects of the problem. Taking in to account the structural features of the developing economies, the impact of improvement in terms of trade and inflow of foreign capital upon the wage gap between skilled and unskilled labour has been studied. Secondly, behaviour of terms of trade of a developing economy has been examined in the presence of non traded goods when some key parameters of the economy change. Thirdly, using a North-South trade model it has been examined the movement of terms of trade for the South due to liberalisation of its trade. It is seen that the movement of terms of trade for the South is associated with its stock of skilled labour and the inflow of foreign capital from the North. Fourthly, the empirical part of the book analyzes the behaviour of terms of trades for India during the last three decades of 20th century. It is found that terms of trade for India improves due to openness of its traded sector and growth in manufactured exports.