Commodity Terms of Trade of Primary Producing Countries

The significance of the movement of the (commodity) terms of trade to the primary producing countries arises from two distinct phenomena: (1) the short-term fluctuations in the terms of trade and their destabilizing effect on the economies of the primary producing countries; and (2) the possibility of a secular trend which may have certain implications for their economic policies. The prevalence of short-term fluctuations in the terms of trade of primary products is an accepted fact and remedies have been suggested for their elimination, though the effectiveness with which each one of these would operate is subject to some doubt.