Problem
Deterioration of international terms of trade
Other Names:
Unequal exchange in tradeDecline in trading position of countries
Nature:
The long-term increase in the price of manufactures which developing countries must import has been accompanied by static prices or price declines for many primary commodities, which are their main export. This deterioration in the terms of trade (a unit value index of exports divided by unit value index of imports) is most visible when the relationship is traced back to the early post-war period; this shows that developing countries are decreasingly able to import goods from funds generated by their exports.
Incidence:
Nine times the amount of export beef required to import one barrel of oil was needed by developing countries in 1981 than in 1971. Profits from one ton of bananas bought a steel bar in 1970; in 1980 it paid for half a bar of steel.
Broader Problems:
DeclineFiscal and trade imbalancesInstability in export earningsInstability of the world economy Narrower Problems:
Decline in import capacityRestricted growth in export markets Related Problems:
Inadequacy of foreign aid Aggravates:
DeflationExport-led developmentInternational economic injusticeUndiversified national economiesConsumer boycott of foreign goodsInstability of the commodities tradeVulnerability of least developed countriesDenial of right to a people to pursue developmentFragmentation of the international trading systemDeterioration in external financial position of countriesVulnerability of national economies to vagaries of external markets for goods and services Strategies:
Providing uniformityEqualizing tax systemsReducing inequality of tradePreserving inequality of trade Subject(s):
Commerce → TradeCommunication → Exchanges
Societal Problems → Vulnerability
Related UN Sustainable Development Goals:
Problem Type:
D: Detailed problems Date of last update
03.06.2019 – 22:03 CEST