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MENTAL MODEL · M3230

Prebisch-Singer Hypothesis

Prebisch-Singer Hypothesis
BusinessHigh supportDevelopment Economics
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

A theory proposed by Raúl Prebisch and Hans Singer, arguing that the terms of trade for primary products from developing countries tend to deteriorate in the long run. Due to differences in demand elasticity between primary products and manufactured goods, and unequal distribution of benefits from technological progress, developing countries are placed at a disadvantage in international trade.

SCAFFOLDING EFFECT

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Guidance for development policy. It provided a theoretical basis for the import substitution industrialization strategy in developing countries, promoted policy-making that seeks economic structural transformation and value addition, and had a profound impact on development economics.

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Prebisch-Singer Hypothesis: Over the long term, the terms of trade for primary commodities (raw materials) relative to manufactured goods tend to deteriorate, causing relative losses for developing countries that rely on exporting raw materials.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Prebisch%E2%80%93Singer_hypothesisZH · Explicit
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