Prebisch (1972) saw the world not in monoeconomic terms, as one homogenous system, but as two distinct areas, a center of economic power in Europe and the United States, and a periphery of weaker countries in Latin America, Africa, and Asia. As we have seen, conventional economic theory (comparative advantage) argued that the exchange of central industrial goods for peripheral primary goods was to the peripheral country’s advantage. This was because technical progress in the center would lead to lower prices for industrial exports and that ultimately a unit of primary exports would buy more units of industrial imports— hence, over the long term, progress would accrue to the periphery with out it having to industrialize. Disagreeing with this conventional argument, Prebisch argued instead that Latin America’s peripheral position and primary exports were exactly the causes of its lack of progress, specifically because of a long-term decline in the periphery’s terms of trade (the ratio between the value of exports and the value of imports). Using Britain as a case study (because it had a long statistical record), Prebisch showed that the terms of trade for center countries had improved with industrialization; from this, he deduced that those of the periphery must have deteriorated. Technical advances benefited the center countries rather than the entire world. This was not a temporary phenomenon, but a structural characteristic of the global system. Conventional economic theory failed to work, he said, because (1) markets in the center were characterized by imperfect competition and price reductions (stemming from technical advances) could be avoided, while competition among primary producers reduced the prices for their goods; and (2) the income elasticity of demand (that is, the degree to which demand changes with a given change in income) is higher for industrial goods (like electronics) than for primary goods (like food), so that the periphery’s terms of trade tended to decline from the demand side. Prebisch concluded that Latin America’s underdevelopment was due to its emphasis on primary exports. The periphery was underdeveloped because it had to produce more and more food and raw materials for export in order to import a given amount of industrial imports. In effect, the periphery was working for the center.