Abstract
Gains in terms of trade in recent years have been a source of prosperity in Africa, Latin America, and the Middle East. This article discusses in detail the behavior and the impact of terms of trade changes. The evidence shows clearly that GDI and GDP have been directly influenced by this performance. The main question that needs to be faced by the commodity-exporting regions in the world is whether this prosperity will remain for the long haul, or if it will end. Furthermore, how will the economy react if conditions reverse? The answer, as described in this article, is that it will not be easy. A reversal of prices will have a major impact on income, and consequently on growth through the expected multiplier effects of a decline in export income.
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