West African Trade: A Study of Competition, Oligopoly and Monopoly in a Changing Economy

By P. T. Bauer | Go to book overview
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APPENDIX 2
THE TERMS OF TRADE OF PRODUCERS OF EXPORT CROPS

1. CALCULATION OF THE TERMS OF TRADE OF PRODUCERS

This appendix is confined to the presentation in some detail of the information underlying the discussion of the terms of trade of producers in Chapter 23, above. Close measurement of changes in the terms of trade of producers of export crops raises much greater difficulties than measurement of changes in the terms of trade in the conventional sense, since the former relate producer prices to the retail prices of imported merchandise and not to c.i.f. values. Ideally, therefore, calculation of the terms of trade of producers would require a series of indices of producer prices and of retail prices in the producing areas. Series of the former can be calculated comparatively easily, and are presented in the tables at the end of this appendix. But there is no index of retail prices over this period in West Africa; indeed, even a reasonably comprehensive index of import prices before 1948 is not available.

The compilation of a consistent and meaningful index of import prices would be difficult, in view of the very great changes in the quantity, quality, composition and sources of imports in the years between 1939 and 1950, including the eclipse over most of this period of some important sources of supply. The familiar conceptual and statistical difficulties are aggravated by the effects of quantitative restrictions over a wide range of imports, with the result that import prices often refer to commodities not freely available at these prices, and at times available only in very small quantities.

Even if it were available, a comprehensive index of import prices would not suffice for the calculation of changes of producer terms of trade. For several reasons, the retail prices of most types of merchandise in West Africa rose between 1939 and 1950 proportionately much more than did import prices. There were various reasons for this. The rates of import duties were increased on many commodities; bottlenecks in communications served to widen the gap between import prices and the relevant internal prices; and quantitatively the most important factor, the retail prices of the so-called short-supply commodities (that is commodities for which demand exceeded available supplies at prices equal to landed costs plus normal distributive expenses and profits) increased proportionately far more than did import prices. Over most of this period a large proportion of all merchandise imports, including

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