Trade

Trade

Developing countries face numerous risks associated with trade. Perhaps the most relevant issue is the worsening of terms of trade, as the world prices of the primary commodities they export tend to fall over time relative to the price of the manufactured products they import. A problem closely related to this is the volatility of world prices for the primary commodities they export. These prices are determined in markets beyond the influence of individual poor countries and affected by factors beyond their control. Related to this are supply side risks, especially the sensitivity of output to climatic variability. Droughts and excess rain as well as other extreme climatic conditions can cause serious damage to agricultural output.

Share