Avoiding and escaping the 'commodity trap' in development
by Mahdi Ghodsi; Robert Stehrer
Global Business and Economics Review (GBER), Vol. 23, No. 2, 2020

Abstract: Based on the 'Prebisch-Singer' hypothesis, a strand of literature has emerged that focuses on the phenomenon of commoditisation and 'commodity trap' in development. Following Kaplinsky (2006), we revisit the hypothesis on a country's terms of trade in manufacturing trade. Offering high quality products and targeting 'niche' markets in high-income countries are beneficial strategies for developing countries to improve their terms of trade and escaping a potential 'commodity trap'. Barriers to entry via standards in the importing countries might even support such strategies. In this study, we firstly propose a proxy to capture commoditisation. Then, applying a gravity model on global bilateral intra-industry trade flows controlling for multilateral resistances over the period 1998-2014, it is shown that compliance with quality non-tariff measures (NTMs) reduces the negative impact of commoditisation on industry-level terms of trade.

Online publication date: Mon, 10-Aug-2020

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the Global Business and Economics Review (GBER):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?


Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com