The Prebisch Singer hypothesis states that over time the terms of trade for commodities deteriorate compared to those for manufactured goods, because the income elasticity of demand of manufactured goods is greater than that of primary products.
12.
In economics terminology, all goods with an Income elasticity of demand greater than zero are " normal ", but only the subset having "'income elasticity of demand > 1 "'are " superior ".
13.
In economics terminology, all goods with an Income elasticity of demand greater than zero are " normal ", but only the subset having "'income elasticity of demand > 1 "'are " superior ".
14.
Many necessities have an income elasticity of demand between zero and one : expenditure on these goods may increase with income, but not as fast as income does, so the proportion of expenditure on these goods falls as income rises.
15.
One important example of this is that if developing countries produce mainly primary products and low value manufactured goods with a low income elasticity of demand, while developed countries specialise in high income elasticity manufactured goods the developing countries will grow at a relatively slower rate ( Davidson, 1991 ).
16.
If the real exchange rate varies considerably, but the price elasticities of demand for imports and exports are low, the long run growth of the economy will then be determined by the growth of world income times the ratio of the income elasticity of demand for exports and imports which are determined by the structural characteristics of countries.
17.
For example, the " elasticity of demand with respect to income " or the " income elasticity of demand " for a product refers to the percentage change in the quantity of the product demanded in response to a 1 % change in consumers'income, or more generally to the ratio of the percentage change in quantity demanded to the percentage change in income.
18.
Labelled drug-related public expenditure showed a positive association with the GDP across the countries considered : r = 0.81 in the case of Health, and r = 0.91 for POS . The percentage change in Health and POS expenditures due to a one percent increase in GDP ( the income elasticity of demand ) was estimated to be 1.78 % and 1.23 % respectively.
