Tài liệu Export instability and economic growth in asian developing countries

VIETNAMESE- DUTCH PROJECT FOR M.A. PROGRAMME IN DEVELOPMENT ECONOMICS EXPORT INSTABILITY AND ECONOMIC GROWTH IN ASIAN DEVELOPING COUNTRIES TONG MINH TUAN September 2003 CERTIFICATE I certify that the substance of this dissertation has not already been submitted for any degree and is not being currently submitted for any other degree. I certify that to the best of my knowledge, any help received in preparing this dissertation, and all sources used, have been acknowledged in this dissertation. Tong Minh Tuan Date: September 91h, 2003 ii ACKNOWLEDGEMENT This thesis IS done under the Vietnamese-Dutch Project for Development Economics. The author would like to thank the Netherlands for her Aid and Scholarship. A lot of praise goes to Dr Gabrielle Berman and Dr. Youdi Schipper for their comments for my thesis. I also would like to thank Dr. Haroon Akram-Lodhi and Dr. Karel Jansen for their worthy academic teaching and methodology in doing thesis. Many thanks are also given to all project teachers and staff in HoChiMinh city, especially Mr. Tran Vo Hung Son, Michael Palmer, Ms. Nguyet, Ms. Chi and Ms Dieu for their helping during the time I studied at the project. I am deeply indebted to my supervisor, Dr. Nguyen Khac Minh, who gave me instructions and comments during the writing of this thesis. I also thank to Dr. Vu Thieu for his help in providing me a good source of references from VietnameseDutch Project library in Hanoi. I have benefited from the discussions with many people and friends, especially my best friends Mr. Nguyen Xuan Nam, Dang Tai An Trang, who gave me many supports in doing the thesis. I also would like to thank to World Bank's staffs, who helped me in searching and collecting necessary documents in WB library in Hanoi. Finally, I wish to express my gratitude and my love to my dad and mum for their spiritual encouragement and material support, they encourage me very much whenever I have difficulties in doing thesis. iii a ABSTRACT EXPORT INSTABILITY AND ECONOMIC GROWTH IN ASIAN DEVELOPING COUNTRIES TONG MINH TUAN HCM Economic University · September 2002 In this study, we look at the relationship between export stability and economic growth in Asian developing countries using panel data analysis. The database includes annual data for seventeen Asian developing countries over the 1986- 2000 period. In theory, this effect is ambiguous, and it is thought that there are no unique and systematic relationships in the causes or effects of export instability. Our result found in the case of Asian developing countries is that there is a negative effect of real export instability on the growth. Specifically studying in composition of export commodity give us the conclusion that the biggest negative impact falls on countries which export manufacturing products and are relatively heavily concentrated in capitalintensive sectors, rather than on countries which mainly export primary products. The impact of export instability on Investment is also examined, and found negative but ambiguous. This result will bring some supports for the hypothesis that the negative effect of instability mainly works through reducing the export productivity of capital stock, rather than the level of investment. iv TABLE OF CONTENTS CHAPTER 1: INTRODUCTION .................................................................. ! 1.1 PROBLEM STATEMENT .......................................................................... 1 1.2 SCOPE OF THE THESIS AND LIMITATION .......................................... 3 1.3 OBJECTIVES OF THE STUDY ................................................................. 4 1.4 METHODOLOGY AND DATA COLLECTION ....................................... 5 1.5 THE STRUCTURE OF THE THESIS ........................................................ 6 CHAPTER 2: LITERATURE REVIEW ...................................................... 7 2.1 THEORETICAL BACKGROUND OF EXPORT INSTABILITY ............ 8 2.1.1 EFFECTS OF EXPORT ON ECONOMIC GROWTH ................................... 8 2.1.1.1 Export is one of the sources of economic growth ........................... 8 2.1.1.2 Effects of Primary and manufactured export in Developing countries ........................................................................................ 10 2.1.1.3 Empirical studies ........................................................................... 12 2.1.2 THE ECONOMIC CONSEQUENCES OF EXPORT INSTABILITY IN DEVELOPING COUNTRIES ........................................................................ 12 2.1.2.1 Macroeconomic consequences ofExport earnings instability ...... 14 2.1.2.2 Micro consequences of Export earnings instability ...................... 22 2.2 EMPIRICAL ANALYSIS ......................................................................... 25 CHAPTER 3: 3.1 MODEL SPECIFICATION AND DATA BASE .............. 29 SOME SELECTED MODELS .............................................................. 30 3.1.1 FOSU MODEL ............................................................................................... 30 3.1.2 OZLER MODEL ............................................................................................. 32 v 3.1.3 JAME LOVE AND SINHA'S MEASUREMENT OF INSTABILITY ......... 33 3.2 MODEL SPECIFICATION ....................................................................... 35 3.2.1 INDEX OF EXPORT INSTABILITY ............................................................ 35 3.2.2 MODELING ................................................................................................... 35 3.3 DATA DESCRIPTION .............................................................................. 39 CHAPTER 4: THE EMPIRICAL RESULTS ............................................ 43 4.2 DESCRIPTIVE ANALYSIS ..................................................................... 43 4.2 THE ESTIMATED RESULTS OF THE MODEL .................................... 47 4.3.1 EXPORT INSTABILITY AND GDP GROWTH ......................................... .47 4.3.2. EXPORT INSTABILITY AND INVESTMENT ........................................... 51 CHAPTER 5: CONCLUSIONS ........................... ~ .......................................... 54 vi LIST OF TABLES TABLE 1. SUMMARY OF THE EFFECTS OF VARIABLES IN THE MODELS .................. 37 TABLE 2. SUMMARY STATISTICS OF REGRESSION VARIABLES .............................. 44 TABLE 3. CORRELATION COEFFICIENTS OF REGRESSION VARIABLES, 249 OBSERVATION ........................................................................................ 45 TABLE 3. REGRESSION RESULTS: THE IMPACT OF EXPORT INSTABILITY ON GROWTH - SPECIFICATION 1 .............................................................. :.. 48 TABLE 4. REGRESSION RESULTS: THE IMPACT OF EXPORT INSTABILITY ON GROWTH - SPECIFICATION 2 ................................................................. 50 TABLE 5. REGRESSION RESULTS: THE IMPACT OF EXPORT INSTABILITY ON INVESTMENT- SPECIFICATION 1 ........................................................... 51 TABLE 6. REGRESSION RESULTS: THE IMPACT OF EXPORT INSTABILITY ON INVESTMENT- SPECIFICATION 2 ........................................................... 52 . LIST OF FIGURE FIGURE 1. .......... PLOTS OF SOME PAIRS OF VARIABLES APPEAR IN A SCATTERPLOT MATRIX .................................................................................................. 46 vii Chapter 1: INTRODUCTION 1.1 Problem statement The issue of export instability m developing countries and less-developed countries has· always been a great field for theoretical and empirical studies. Recent events have put the problem of export instability in an important concern. Some economists even consider instability as a major item affecting growth in several countries. In the past two decades, many development economists have been concerned about the negative effect that instability in export may have on the growth of developing countries (Koomsup, 1978). The sudden change of oil prices by the OPEC countries in 1973-74 causing balance of payments difficulties in most non-oil producing countries was an example. Hence the issue of export instability has increased its important in international forums such as UNCT AD IV and the Conference of International Economic Cooperation (Koomsup, 1978:5). A major concern of developing countries is the problem of instability in their export of products (Begg, 1991 ). Many countries in Asia are developing countries, in which Vietnam is one. It is often said that export instability in developing countries is more severe than in developed countries, because many developing countries are usually exporters of primary products which are traded in a very volatile and unpredictable world market (Massell, 1964). Primary products also have a tendency to decline in term of international price with increasing fluctuation in price over time (Begg, 1991 :636). Whether export instability has a negative effect on development in these developing countries? In addition, some countries have achieved high average ratio of export over GDP (Malaysia( 57%), Thailand(25%), HongKong(111 %), Korea(30%) in 1970-1994) (Ba,1996). So instability in export may lead to instability in GDP, and thus, in GDP growth in these countries. James Love(1992) undertook his study on export instability in developing countries and his conclusion was that Export instability increased between two periods of 1960-1971 and 1972-1984. Whether such mcrease m Export instability deteriorates GDP growth in these countries? Because Vietnam is one of Asian developing countries which export lots of primary products, then what would be drawn for these countries in studying of export instability could also be useful for Vietnam. Furthermore, the adverse effects of export instability may be worse than for Vietnam than a developed economy since like a developing country, Vietnam lacks necessary tools and ability to deal the problem effectively. If the damage of instability could be easily recognized in Asian developing countries as well as in Vietnam, governments can reduce or eliminate the problem by doing something such as diversifying their export commodities, or reducing their dependence on a few markets. Some developing countries can also reduce the adverse effects of export instability on key economic variables by separating domestic price from fluctuations in world prices. Recently Vietnamese government has followed a strategy of export-oriented in order to achieve the high economic growth rate like some successful NICs,(Ba, 1996), so this makes export play a more important role in developing the economy. Hence there is a need to know what the relationship between export instability and economic growth is. Export instability creates the uncertainty about the export eaming, and according to Keynes (1938), it has a negative impact on investment decisions and technological improvements. On the contrary, Friedman (1954) say that Export instability may lead to a decline in consumption and then, an increase in savings, thus economic growth may be higher. Previous empirical studies so far also give different results: some studies find a positive relationship between export instability and economic growth, some other studies find a negative relationship between export instability and economic growth while some other studies find no relationship between export instability and economic growth (Sinha, 1999). While there is no consensus in generally finding of export instability effects on economic growth, it is therefore interesting to study this issue in Asian developing countries. The result obtained for Asian developing 2 countries will help us to know (i) first: what is the relationship between export instability and economic growth in countries which export lots of primary commodities like Asian developing countries, (ii) if is found that export instability does have a negative impact on economic growth, so we will know the significance of export, and the government has to follow a policy whereby such fluctuations can be smoothed out, (iii) which theoretical school is appropriate for the case of Asian developing countries. Therefore beside all of empirical studies listed above we need more research to know exactly the relationship in Vietnam and Asian developing countries. 1.2 Scope of the thesis and limitation Empirical studies have also checked the existence of a negative relationship between export instability and economic growth, and some have provided support for a positive relationship. Almost all previous studies have used a cross-countries approach alone, though in some studies researchers have relied on time-series approach. In this study we use an instability index that varies over time as well as across countries. We then investigate the impact of export instability on GDP growth by employing annual data for seventeen Asian developing countries over the period 1986- 2000. This research will focus on Asian developing countries and estimate over period of 1986-2000 to conclude that there is a negative effect which is sufficiently large for export instability to be a serious problem for developing countries. Our study will then rely on panel data of 17 developing countries over the most recent period of 1986-2000. The study uses mostly secondary data collected from Word Bank or IMF statistics. On general problem with cross-country appro11ch is that it estimates average relationship and does not provide much information on th~ specific countries. The result of the study, therefore, will give only the general and common relationship which can be apply for Asian developing countries instead of a specific relationship in a given country like Vietnam. It may be a limitation of this study. However, it is reason to believe that the conclusions drawn in our study may provide general guidelines of 3 some use in development planning by generating a better understanding of certain fundamental economic relationship. Furthermore it is still necessary to study because export performance of Vietnam is rather similar to those of some Asian developing countries in the early period (Ba,1996). 1.3 Objectives of the study It is the relationship between export instability and economic growth in Asian developing countries that this study seeks to examine. The purpose for this is to know and compare the result from the case of Asian developing countries to that of other countries. The research on Asian developing countries is particularly interesting because there have been considerable primary products in export of these countries The results from previous studies on export instability and economic growth are so far conflicting. They are different from study to study. Glezakos (1973) conclude that instabilities in export earnings are harmful to growth and income when studying in LDC's, but MacBean (1966), Coppock (1977) and Knudsen & Pams (1975) do not find any empirical evidence that there is a significant relation between export instability and such economic variables as investment, national income, and economic growth rate. Moran (1983) uses cross-section data for 30 countries (18 of them in Lantin America) to study the relationship between export fluctuation and economic growth. Using several measures of export instability, he finds that the results are very sensitive and no general conclusions can be reached Hence, while there are no homogenous conclusion m prevtous empirical studies, our research will study the characteristics of expmi m Asian developing countries, by investigating the relationship between export instability and economic growth in Asian developing countries. 4 Our research needs to answer the following important question: Research question: 1. What is the relationship between the percentage of absolute value of the deviations of actual export earning from five-year moving average of export earnings and GDP growth in Asian developing countries in the period of 1986-2000? 2. What is the relationship between the percentage of absolute value of the deviations of actual export earning from five-year moving average of export earnings and Capital formation growth in Asian developing countries in the period of 1986-2000? In our study we use the percentage of absolute value of the deviations of actual export earning from jive-year moving average of export earnings as an index to measure export instability. Research hypothesis In many Asian developing countries, export of primary goods has still played an important role in developing economy in some countries (Berg, 1991). Instability in price of primary good may lead to volatile export earnings and fluctuation in GDP growth in these countries. We may expect that export instability indeed have a negative influence on economic growth. Many empirical studies in developing countries also bring in this result. So we formulate following hypotheses: 'An increase in the percentage of absolute value of the deviations of actual export earning from five-year moving average of export earnings lead to a decrease in GDP growth in Asian developing countries'. 1.4 Methodology and Data Collection To find the impact of export instability on growth we first measure export instability as the percentage deviation of export earnings from its five-year moving average, so this instability index varies over time for each country. We 5 will investigate the impact of export instability on econom1c m Asian developing growth by pooling across 17 countries and over time of period 1986-2000. Regression on neoclassical production function will be estimated with instability as an explanatory variable. The ordinary least square (OLS) method is a suitable tool for running regressions because we are investigating the economic growth and its influential factors among which expmi instability 1s one. The data used for this study are secondary data and come from the International Financial Statistics of the International Monetary Fund (IMF). All data are expressed in relative terms to correct for country size. Sample size is about 300 observations obtained from panel data of 20 countries and 16 years (19862000). 1.5 The structure of the thesis The thesis will consists of five chapters: Chapter two is concerned with the theoretical framework of instability. The chapter presents some literature review and empirical studies about expmi instability. The chapter will discuss about the effects of export, and then export instability, directly or indirectly impacting on growth. The chapter also reviews some empirical research finding the relationship between export instability and economic growth. Chapter three introduce models and data sources for the research Chapter four is the main one, which presents the empirical results of model estimation through descriptive analysis and econometric regression. Chapter five presents the Conclusion. The chapter concludes by summarizing the thesis and suggesting some policies that would reduce the harmful effect of export instability. 6 Chapter 2: LITERATURE REVIEW The issue of export instability in developing countries and less-developed countries has always been a fertile ground for theoretical and empirical investigation (Koomsup, 1978). But what is meant by instability? We will first make clear some basic concepts involving export instability before presenting the theoretical and empirical issues. Definition of instability The issues of the choice of index raised by researchers relate directly to the question of defining what is meant by "instability". Many researchers have focused on separating out trend earnings from deviations around the trend. This approach regards deviations from trend as comprising instability (Love, 1992). The trend value here can be viewed as 'normal' or 'anticipated' path of earnmgs. James Love(1992) as well as most of researchers regarded 'deviations from trends' as comprising 'instability' Coppock ( 1977) argued that instability means "excessive departure from some normal level", and several authors have found to be more specific about the definition of the "excessive" components of deviations from "normal". On a different way, Knudsen and Parnes (1975), based on the Friedman's hypothesis of permanent income, argued that unforeseen and temporary in export earnings embrace the concept of uncertainty, thus they comprise instability. Hence, by adaptation of Friedman's permanent income hypothesis Knudsen and Parnes define instability as being caused by unforeseen components in the future. Although there has been no consensus on definition of instability, the choice of instability indices based on each definition does not matter. (Love, 1992). A number of authors such as Coppock, Masse! and Glezakos found that there were high degrees of correlation among estimates of instability obtained using different indices. Through some studies of many researchers using different 7 indices in their estimating instability, results often give the same answer (Love, 1992). In this study, we will use the definition of instability as James Love do: instability is regarded as "deviation from trend". It is chosen because it was most widely used by many authors. In addition, we chose this definition in order to be appropriate with the measure of instability which will be presented in next chapters. As a result of this export instability can be considered as determining the deviation of actual export earning around its trend. 2.1 THEORETICAL BACKGROUND OF EXPORT INSTABILITY We will first discuss the impact of export on economic growth theoretically before we can go further. This reason is due to the fact that export has gradually become an important factor, and people often consider it an input in neoclassical production function. Today countries in the world are more open, trading between them then becomes indispensable. Balassa (197), Kreuger (1993) and Hughes (1990) argued that openness to trade was a crucial source of East Asia's rapid growth and that government's principle contribution was to limit protection and ensure that incentives were largely neutral. And in such a region of open trade, according to the study by World Bank (1993), rapid export growth played an important role in permitting East Asian economies to avoid foreign exchange constrains. Therefore the study suggests that exports and export policies played a crucial role in stimulating growth. It seems to be reasonable that today export may be seen a new input in ·neoclassical production function. 2.1.1 2.1.1.1 Effects of Export on economic growth Export is one of the sources of economic growth According to Neoclassical trade theory, the two countries can benefit from each other through International Trade. Because of the opportunity cost, the two countries will use its resources efficiently by producing and exchanging goods to which they have relative advantages. Because now each country specializes 8 m its own comparative advantage product, each country can use the most abundant resources to produce, so they can get higher output and can import many other goods at relatively lower price. Each country tries to use most of the abundant resources to make it have comparative advantage (B.erg, 1991). In free trade both countries can enjoy more goods than they produce and enjoy without trade. Early many economists studied the gains from trade in the view of economic growth such as: Adam Smith, Ricardo, and many economists furthered later such as Balassa, Ram, Gillis. They all agreed about the significant and positive effects of trade on economic growth (Robert, 1999). Through studies in development, economists found that economic growth was caused by following factors: (i) the increase in the factor inputs, (ii) the increase in the productivity or efficiency. How to increase growth also means how to increase these factors. Quality of inputs between countries can be improved by reallocating resources effectively. But the process of reallocating resources between countries can be taken place through export and import (Robert, 1999). Productivity can also be increased by greater specialization in each country. If it is possible to exchange, a country can specialize on producing commodities to which it has relative advantage. Therefore export, which also means exchange, has contribution to economic growth (Ba, 1996). Productivity in each country involves much in the development of its technologies. But export is a channel for learning and technological advancement. Export is also an effective means of introducing new technologies both to the exporting firm in particular and to the rest of the economy For some new industrializing countries (NICs), exporting of manufactured goods was very successful and it stimulated much economic growth through the enhancement of productivity, reallocation of resource, economics of scale, better specialization (Ba, 1996). Many studies of export which leads to rapid growth were carried out by Balassa, Feder, Kruger. In the early 1970's Balassa (1971) and others began exploring the links between trade and growth. Over the next twenty years, a large number of studies found that 9 export growth and export level were highly corel~td with GNP growth (Edwards, 1992). 2.1.1.2 Effects ofPrimary and manufactured export in Developing countries For developing countries, early the export consisted almost entirely of primary commodities while the share of manufactured exports in total export was very small (Ba, 1996). From 1970, export expansion has been taken place, especially at manufactured export. The rapid development of Asian NICs and ASEAN might be due to their outward-looking and market-oriented economic policies. The growth rate of expoti was very high for these countries. For example, in 1982-1983 the average ratio of exports to GDP in NICs and ASEAN was over 50%, while the ratios of Unites and some other developed countries were 8%. Developing countries merchandise exports· in 1999, according to WTO News 2000 Press releases, expanded by 8.5%- about twice as fast as the global average. Remarkably, the growth of export was increasing in relation to the growth of income in these countries. It is why we will examine effects of primary and manufactured export in developing countries (Ba, 1996). According to Hecksher-Ohlin, less developed countries can also export to developed countries. In contrast with Ricardo, who just based his theory on labor opportunity cost, Hecksher-Ohlin bases on differences in factor endowments of countries and explains the participation of countries in international trade (Edward, 1995). By his theory, less developed countries can exchange their labor-intensive products for capital-intensive products from developed countries. If a country has relatively abundant supply of the factors used in a commodity production then it can be said that this country has comparative advantage in the commodity. Hecscher-Ohlin theory seems to focus on export from less developed countries to developed countries. Obviously it expanded the application of comparative advantage theory, explaining that even a less developed countries can export to developed countries. Because of it's higher ratio of labor relative to other factor, less developed or developing country will export goods that use their abundant 10 factors such as labor intensive products and natural resources intensive products intensively (Edward, 1995). Although it explains why less developed countries can trade with developed countries, one of the weaknesses of Hecksher-Ohlin theory is that it deals only with demand-side factor. The relative prices would not only be depended on supply side, but also on demand side. Export affects on growth through productivity gain from technology transfer. In the global trade, from 1970 to now, the trend of growth rate of manufactured exports increased much rapidly than that of primary commodity. The significant demand of manufactured products make them able to be exported from a developing country to other developing one, and from a developing one to developed one as well. Export in manufactures has grown fastest between advanced industrialized countries (Ba, 1996). According to Linder (1961 ), for countries with similar factor endowments, trade can take place because of different varieties of products. Raymond Vernon (1966) when discussing about technology gap argued that some corporations taking advantage of cheaper labor cost in developing countries might come there to invest and operate. The kind of this activity is normally known as Foreign Direct Investment (FDI). Through this the host developing countries can get gains of more productivity from technology transfer through FDI. NICs and ASEAN countries, for instance, could attract and absorb relevant technique in export sectors to make them able to export their products to other developed countries. Therefore, by gains of foreign capital, foreign technology, foreign skill and foreign management from FDI in export sectors, domestic economic growth will be enhanced due to "endogenous technical change" (Karel Jansen, 1995). Export also affect on growth through investment. When FDI comes to host country, it will stimulate investment and consumer demand. One of the most significant contributions of FDI is that it provides capital stock and technological progress to invest in host country, thus it will enhance domestic investment (Sundrum, 1994). According to R.M Sundrum (1994), growth of 11 export in domestic country will create more opportunities to invest. He also found positive relationship between growth of export and growth of investment in developing countries in the 1960s. Export growth also in other way increases the efficiency of investment, resulting in a lower incremental capital output ratio (ICOR). Higher rate of export growth will stimulate investor to upgrade their techniques in order to compete with the world market. 2.1.1.3 Empirical studies There are many empirical studies have been conducted to the role of exports in economic growth. A large number of studies found that expmi growth and export levels were highly correlated with GNP growth (Edward, 1992). R.M Sundrum(1994) uses data for 41 less developed countries (LDCs) and runs regression of the role of export. He found that the relationship between export growth and economic growth is strong positive. Choong Chee Keong (2003) studies the case of Malaysia, choosing six variables which according to author are reasonable affect economic output, and finds that most of the explanatory variables, including export growth variable, are statistically significant and have positive coefficients. Robert (1999) examines the case of Japan and Korea, and finds that lower tariffs and higher import volumes would have been particularly beneficial for Japan during the period 1964 to 1973. His result also leads to the conclusion that Japanese export were a particularly impmiant source of productivity growth, this suggests that further liberalization by Japan and other ASEAN countries may result in future dynamic gains. Hence, export expanston is indeed a part of national products that directly adds to GDP growth. 2.1.2 The Economic consequences of Export instability in Developing countries The issue of export instability The issue of export instability m less developed countries (LDC's) and developing countries has always been a fertile ground for theoretical and empirical investigations. Recently, due to some .bad events such as the 12 downward tendency of primary products, the oil shocks which have happened to export sectors in developing countries, the issue of export instability has assumed increasing importance in international conferences (Koomsup, 1978). Export instability, at first glance, seems to be detrimental to the economies of most LDC's and developing countries because of their primary exports which are traded in volatile and unpredictable world market. Because it is argued that export earnings are a major source of income in most LDC's and some developing countries, export instabilities adversely affect their ability to import essential capital goods, domestic investment, national income, and government revenue and expenditure (Ozier, 1988:18). Furthermore, because of lack appropriate tools in LDC's and developing countries, export instability is expected to cause more damage in LDC's and developing countries than in developed countries. Some factors such as the concentration on a small number of export commodities and export market, the high proportion of primary products in their export, the low income price elasticity of demand and supply in export commodities and the small economic size are the causes of export . instabilities in LDC's (Koomsup, 1978). Today there are two international organizations which were designed to reduce the adverse impacts of short-term instabilities in export earnings of LDC's. One of them is IMF organization which provides necessary financing facilities to compensate for shortfalls in export earnings for circumstances beyond the control of the country. The other organization is STABEX, which was set up by European Economic Community to some LDC's in Africa. Countries in this organization will be helped to stabilize their earnings by compensating and reimbursing for the difference between actual export earnings and the average of their export earnings over the past four years (Koomsup 1978). While the trend of price of primary products was fluctuated very much, the price of manufactured was more stable. According o Maizel's calculation, there exists a decline in term of trade of primary export relative to manufactures imported during the period of 1980-1991 (Maizel, 1968). And according to Singer (1991) and Matthias Lutz's (1994) studies, volatility of terms of trade 13