The Manufactures Terms of Trade of Developing Countries with the United States, 1981-97

Date: Jan, 2000
ODID Working Paper No. 36
Author(s): Alf Maizels (QEH)

There is an ongoing debate on whether or not developing countries suffer a trend deterioration in their terms of trade in their exchange of manufactures with developed countries. In a contribution to this debate, this paper analyses trends in the prices of US imports and exports of manufactures in trade with developing countries, and - for comparative purposes - with other developed countries. The results show a significant terms of trade deterioration for developing countries over the first half of the 1980s, with no significant change since then, while for other developed countries their manufactures terms of trade vis-à-vis the US was trendless in the 1981-85 period, with significant improvement since. Over the whole period studied, the manufactures terms of trade of developing countries with the US thus showed a relative deterioration compared with the corresponding terms of trade of other developed countries. The paper also considers probable causes of this relative deterioration.

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