Prebisch Singer Thesis

The Prebisch-Singer thesis, also known as the Prebisch-Singer hypothesis, is an economic theory that states that the terms of trade between developed and developing countries will deteriorate over time, leading to a widening gap between the two. The theory was developed by economists Raúl Prebisch and Hans Singer in the 1950s, and has been a topic of debate and discussion ever since.

The main argument of the Prebisch-Singer thesis is that developing countries, which are typically rich in primary commodities such as agricultural products and raw materials, will see a decline in the prices of these commodities relative to manufactured goods produced by developed countries. This is due to the fact that developed countries have a comparative advantage in manufacturing, leading to higher productivity and lower costs.

As a result, developing countries will have to export more and more of their primary commodities in order to afford the same amount of manufactured goods, leading to a worsening terms of trade. This, in turn, will lead to a decrease in their overall economic growth and development.

The Prebisch-Singer thesis has been a controversial topic, with some economists arguing that it is no longer relevant in today's global economy. However, many others still believe that the theory holds true and that developing countries continue to face challenges in achieving economic growth and reducing poverty.

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