ABSTRACT
The direction of trend in relative commodity prices has implications for many developing country growth rates. To assess causal underpinnings we create ultra-long aggregate series shaped by common factors. Tests show that series present a downward trend over the entire sample which can be broken into four regimes of predominantly increasing decline: 1650–1820, 1821–1872, 1873–1946 and 1947–2010. We argue factors like technology are commensurate with this structure. Finally, we suggest the trend in economic activity proxies for such factors and show a negative relationship between trends in commodity prices and World GDP that explains the resource curse.
