IB Econ Chap 26 Terms of Trade - Sunny Hills High School

We see that for the first six countries listed, the dependence on
the export of primary commodities, as compared with the export
of manufactured products, is very strong. For example, 9).8o/o o!
all Benin's merchandise export earnings come lrom the sale of
primary commodities. In the same manner, Mali earns 91.6%
of its merchandise export earnings by exporting primary
commodities.
Howeve! notice the difference between the first four countries and
the next two, as noted in the key. The first four are known as nonoil-exporting
LDCs, while Angola and Yemen are characterized as oilexporting
LDCs. Almost all o{ the export revenue for Angola and
Yemen comes from the sale of oil.
The last two countries, Bangladesh and Nepal, are different again.
They concentrate on the export of low-skill manufactured products,
especially textiles.
We can see from Table 26.3 that there is one more group of LDCs that
need to be identified, which are the services-exporting LDCS, such as
Cape Verde and rhe Maldives. These countries make most of their
export revenue from tourism.
Source: Country Profiles, WIO
f Services-exporting LDC
Table 26.3 Share of merchandise trade and services in total exports for selected
LDCS, 2008
The problems facing different groups of LDCs come from diflerent
sources. We are currently focusing on the problems facing those
developing countries that are dependent on the export of non-oil
commodities, because some of the barriers to lheir growth and
development are related to their terms ol trade.
32.5
More than 2 billion people in the developing worldover
one third of humanity-make their living from
agricultural commodities.
ln least developed countries (LDCS), one out of
four people lives and works in a rural area. Most
are small farmers or landless workers.
Eighty{ive developing countries depend on
commodities for more than half their export
earnings. Thirty-eight developing countries depend
on one agricultural product for more than 500/o of
their export revenues and 48 countries are
dependent on t\ /o agricultural export products.
67.5
26. Terms ot trua" [!
o ln January 2008, UNCIAD's price index for non-fuel
commodities reached its highest level (in current
dollars) since 1960. The index is up 1090/0 since
1992. Metal and mineral prices rose by 2l7olo
during the same period and agricultural raw
materials prices increased by 67010.
. ln real terms, however, the commodities index is
still low compared with levels attained in the 1970s
and eady I980s.
Source: UNCIAD Press Release, Ceneva, April 2008
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