Global Diary

Africa’s T — Terms of Trade

Are terms of trade working against African development?

Africa's terms of trade.


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.

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About Guy Pfeffermann

Guy Pfeffermann is the Founder and CEO of the Global Business School Network. He was formerly the chief economist of the IFC. Follow him @GPfeffermann

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