In this article we will discuss about the net barter terms of trade with its criticisms. In the contemporary world, the concept of net barter terms of trade was introduced by F.W. Taussig. This concept was called as commodity terms of trade by Jacob Viner. It is defined as ratio of export prices to import prices. It can be expressed [...]
The increased production of export good requires the diversion of productive resources from other sectors to the export sector. The amount of utility lost or sacrificed per unit of resources employed in the production of export good constitutes the real cost of producing exports. Whether a country gains from trade or not, can be truly measured if the real costs [...]
The concept of income terms of trade attempted — a correction in the net barter terms of trade for changes in the volume of exports. Jacob Viner made another modification over the net barter or commodity terms of trade. He corrected the commodity terms of trade for changes in factor productivity in the production of export goods. The concept of [...]