Africa’s T — Terms of Trade
Are terms of trade working against African development?
February 23, 2005
African countries all import manufactured goods — and most also import oil. For the continent as a whole, terms of trade have, by and large, worked against Africa over the last two decades.
Amazingly, that is true in recent years even for Africa’s oil-exporting countries.
Terms of trade drive a wedge between physical production — which is reflected in "real gross domestic product," the usual yardstick for economic growth — and people's incomes and purchasing power.
Over the last 20 years, people needed to produce ever larger quantities of non-oil exports in order to be able to import the same amounts.
Founder and CEO, Global Business School Network Guy Pfeffermann is the Founder and CEO of the Global Business School Network. He was the Director of the Economics Department and Chief Economist for the International Finance Corporation from 1988-2003. Since 2003, he has served as the Director of the Global Business School Network of International Finance […]