NORTH-SOUTH TERMS OF TRADE AND GROWTH - A MACROECONOMIC FRAMEWORK ON KALDORIAN LINES

In the Presidential address to the Royal Economic Society (1976), Nicholas Kaldor presented an informal model of the world economy. On this Kaldorian line, this paper presents a North-South growth model. It has been observed that there is no relationship between the monopoly power of the Northern capitalists and the North-South terms of trade. Technical progress in the South has a declining impact on the Southern terms of trade while technical progress in the North does not have a similar impact on the Northern terms of trade. Furthermore, this model shows that the South as a whole cannot speed up its long-term growth rate through export promotion; rather it faces a terms of trade loss.