Exchange Rate Parity for Trade and Development: Theory, Tests, and Case Studies

Paperback (Print)
Buy New
Buy New from
Used and New from Other Sellers
Used and New from Other Sellers
from $34.99
Usually ships in 1-2 business days
(Save 58%)
Other sellers (Paperback)
  • All (9) from $34.99   
  • New (5) from $53.00   
  • Used (4) from $34.99   


Exchange Rate Parity for Trade and Development: Theory, Tests, and Case Studies extends recent theories of incomplete markets to investigate empirically the appropriate balance between market and state in trade relations between developed and developing countries. Yotopoulos concludes that government intervention in foreign exchange and trade is necessary in developing countries in the early stages of development and inevitably decreases as development progresses. More specifically, free currency markets are shown to have an inherent distortion that leads under-developed countries to misallocate resources systematically. Rationing of foreign exchange prevents a "soft-currency distortion" that commonly afflicts developing countries and can turn comparative-advantage trade into competitive-devaluation trade, with severe losses of income and welfare. It is found that the level of under-development narrowly circumscribes and conditions the extent to which free-market, free-trade, laissez-faire policies can be beneficial to developing countries, which is contrary to the mainstream policy paradigm as currently applied. The analysis and tests draw on empirical research in 70 countries to confirm the usefulness and validity of the theoretical framework. The book concludes with extended case studies of Japan, Taiwan, the Philippines, and Uruguay and with relevant policy recommendations.
Read More Show Less

Editorial Reviews

From the Publisher
"I thoroughly enjoyed reading this book and found it most stimulating. What a pleasure it is to read careful empirical work by an author who worries about what his data mean....I find the basic analysis interesting and quite convincing in positive terms." L. Alan Winters, International Trade Division, The World Bank

"This important work makes a major and very timely contribution to the current debate about development strategy for less developed countries, as well as to the debate on restructuring the former Soviet Bloc economies.... Yotopoulos also helps shift the debate from economic theory to institutional and political economy issues, a worthwhile shift." David Felix, Washington University in St. Louis

"This is a tightly written book on trade and development, firmly based in the real world, which cannot be said about a great deal of economic theory today." Maxwell J. Fry, University of Birmingham

"The hallmark of a good book is not that it answers all questions, but that it changes the way we think. Professor Yotopoulos has given us an original and important idea, and enough evidence to cause us to take it seriously. For these contributions, we owe him a debt of gratitude..." Adrian Wood, The Journal of Development Studies

"...the strength of this book is the empirical analyses of the relation between exchange rates and growth. The results are quite novel (and provocative) and should instigate further empirical analyses on this subject....the empirical results are interesting..." Bo Sandemann Rasmussen, Journal of Economic Literature

"...its insightful observations, emanating from its empirical analysis and an impressively exhaustive literature review, are borne out by African and East European Experience..." Perry S. Mistry, Development Policy Review

"Exchange Rate Parity for Trade and Development by Pan Yotopoulos represents a valuable contribution...." David Felix, Latin American Research Review

"He has written an ambitious book...Exchange Rate Parity for Trade and Development is a provocative, interesting book" Review of Radical Political Economics

Yotopoulos wants to show that recent theories of incomplete markets justify a reformulation of optimal exchange-rate policy in developing countries." Review of Radical Political Economics

Read More Show Less

Product Details

  • ISBN-13: 9780521022620
  • Publisher: Cambridge University Press
  • Publication date: 9/28/2005
  • Pages: 344
  • Product dimensions: 5.98 (w) x 8.98 (h) x 0.79 (d)

Table of Contents

List of Tables and Figures
1 Introduction 3
2 Trade and development: The contours of the landscape 12
3 Incomplete markets and the "new development economics" 38
4 Market incompleteness in an open-economy LDC 63
5 The relationship between real and nominal exchange rates 85
6 Empirical investigation of real exchange rates: Tradability and relative prices 103
7 An endogenous growth model of incomplete markets in foreign exchange 120
8 Are devaluations possibly contractionary? A quasi-Australian model with tradables and nontradables 158
9 Japan: Overvaluation without rent-seeking 191
10 The Philippines: Failure in policy and politics 224
11 Financial integration and the refractory role of intervention: Uruguay and Taiwan 249
12 Summary, conclusions, and policy recommendations 282
Bibliography 293
Index 311
Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star


4 Star


3 Star


2 Star


1 Star


Your Rating:

Your Name: Create a Pen Name or

Barnes & Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation


  • - By submitting a review, you grant to Barnes & and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Terms of Use.
  • - Barnes & reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously

    If you find inappropriate content, please report it to Barnes & Noble
    Why is this product inappropriate?
    Comments (optional)