1. World Demand as a Determinant of Immiserizing Growth
Tamara Todorova American University in Bulgaria

2. Literature Review The concept of immiserizing growth
Bhagwati (1958), “Immiserizing Growth: A Geometrical Note”
Bhagwati et. al. (1998)
Johnson (1955, 1967)
Krugman and Obstfeld (2000)
Empirical investigations of immiserizing growth
Uzawa (1969), Hamada (1974), Brecher and Diaz-Alejandro (1977)
Hamada and Iwata (1984)
Sawada (2003)
The “adding-up” problem
Akiyama and Larson (1994)
Imran and Duncan (1988)
Hallam et al. (2004)

3. Table 1. Import demand elasticities for selected commodities as estimated by Imran and Duncan (1988)
Commodity
Short-run Import Demand Elasticity
Long-run Import Demand Elasticity
Cocoa
-0.17~ -0.25
-0.34~ -0.43
Tea
-0.17~ -0.3
-0.38
Coffee
-0.15~ -0.19
-0.23
Natural rubber
-0.27
-0.76

4. Table 2. Own-price demand elasticities for selected non-traditional agricultural commodities as estimated by Hallam et al. (2004)
Non-traditional Agricultural Commodity
Own-price Demand Elasticity
Asparagus
-1.69
Avocados
-2.67
Cabbages
-1.11
Green Peas
-1.14
Green Beans
-0.7
Green Corn
-0.9
Pineapples
-1.35
Mangoes
-0.84

5. Theoretical Grounds of Growth
Production and consumption abilities with growth
Biased growth
Cloth-biased growth and declining terms of trade
Elastic and inelastic world relative demand
Oil production and price elasticity of demand for oil
Expanding consumption abilities with elastic demand

6. Data and Evaluation Procedure on Brazil’s Exports of Coffee

7. Figure 1. Production and consumption abilities of a country producing two goods
Food
Production
Isovalue Line
Cloth Production

8. Figure 2. Biased growth Food Food Production Production PPF2 PPF1 PPF2
Cloth Production Cloth Production
a) Growth biased toward food b) Growth biased toward cloth
Production Production

9. Figure 3. Biased growth with constant relative prices
Food Food
Production Production
Cloth Production Cloth Production
a) Growth biased toward food b) Growth biased toward cloth

10. Figure 5. Cloth-biased growth and declining terms of trade

11. Figure 6. Terms of trade effects of cloth-biased growth
a) Elastic relative demand b) Inelastic relative demand

12. Table 3. Average annual percent changes in the terms of trade Source: International Monetary Fund, World Economic Outlook, May 2001
Region
Advanced countries
1.1
Oil-exporting developing countries
-7.5
Non-oil-exporting developing
countries
-0.6

13. Figure 7. Economic growth with elastic relative demand
Food
Production
Cloth Production

14. Figure 8. Changes in relative supply in the inelastic and elastic part of the demand curve

15. Table 4. Import demand elasticity facing major suppliers of coffee as estimated by Imran and Duncan (1988)
Short-run Import Demand Elasticity
Long-run Import Demand Elasticity
Brazil
-1.2
-4.9
Colombia
-2.4
-10.5
Cote D’Ivoire -5
-25.5
Kenya
-14.8
-73.7
World
-0.17
-0.23

16. Conclusion
Immiserizing growth is less likely to occur than is generally predicted. It will occur only when for a given increase in world relative supply of a given commodity relative demand for it is inelastic. This would likely be the case when there are no close substitutes for the commodity in the importing countries or globally.

17. World trade gives ample examples of situations when world demand for particular goods is elastic. As a result of that their exporters have become relatively wealthier, not poorer.