The Terms of Trade Between Spain and Britain and the Industrial Revolution

In this chapter, the Prebisch thesis of a long-run deterioration of primary producers’ terms of trade vis-a-vis industrial nations and its consequences on the former’s welfare is tested for Spain and Britain in the age of the Industrial Revolution. At odds with the Prebisch doctrine, the evolution of the terms of trade between Spain and Britain had a positive effect on Spain’s welfare, as productive factors embodied in exportables improved in absolute and relative terms, supporting the view that Spain’s relative decline in the nineteenth century cannot be blamed on specialization along lines of comparative advantage.