The Effects of the New Economy on the Terms of Trade between North-South Countries: a Structural Economic Dynamic Approach

The New Economy, understood as the rapid advances of information and communication technology extending labour productivity, has been pointed out as a major determinant of the international competitiveness among nations in recent years. Depending on the choice of techniques, process innovations may add another source of concern for the increasing differences in growth rates among developed and underdeveloped countries. Following a structural economic dynamic approach, this paper examines potential impacts of the New Economy on the terms of trade between North-South countries and two scenarios are considered.