technological progress: not only are the fruits of technological progress distributed asymmetrically (in favour of industrial economies), but also progress has an asymmetrical impact on future demand (again in favour of industrial economies). Has the Prebisch-Singer hypothesis withstood the test of time? Unsurprisingly, the hypothesis has been intensely scrutinised as a consequence of its conclusions. If the hypothesis is true, then it logically follows that underdeveloped countries need to industrialise and – in strong contradiction to the degree of trade liberalisation promoted by the Washington Consensus – increase tariff protections on nascent industries. 162 The hypothesis has neither been confirmed nor refuted empirically, however recent research is moderately in favour of the hypothesis being true. In 2013 The International Monetary Fund published a paper investigating the Prebisch-Singer hypothesis. 163 The authors of the paper examined the secular trends and short run volatility (two important factors in the dynamics of relative primary commodity prices) of twenty-five primary commodities, with some of the data in the series going as far back as 1650. The authors of the paper concluded that, while the results were mixed, there was a clear indication that “in the majority of cases the PSH” was “not rejected.” 164 Although the Prebisch-Singer hypothesis has been vigorously contested by neoliberal economists, there are a number of reputable neoclassical economists that have acknowledged – in similar terms to 162 Center for International Development, “Washington Consensus” Harvard University (April 2003), <http://www.cid.harvard.edu/cidtrade/issues/washington.html> 163 Rabah Arezki, Kaddour Hadri, Prakash Loungani, and Yao Rao “Testing the Prebisch-Singer hypothesis since 1650: evidence from panel techniques that allow for multiple breaks” International Monetary Fund (2013) 164 Rabah Arezki, Kaddour Hadri, Prakash Loungani, and Yao Rao, “Testing the Prebisch-Singer hypothesis since 1650: evidence from panel techniques that allow for multiple breaks” International Monetary Fund 2013, page 3.
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