Policy Applications To Terms Of Trade Shocks

The terms of trade shocks have an especially marked impact on the economies of developing countries. But African countries have not responded appropriately to these shocks, hence this study was carried out to compare the impacts of the application of policy adjustments to terms of trade shocks and to assess the extent to which these countries respond to the shocks. The study decomposed and estimated critical performance measures of the economic impacts of these adjustments to terms of trade shocks in these countries for the period 1970-2009 into quantifiable economic indicators namely: changes in import intensity, economic compression, export promotion and external debts. The findings of the study confirms that adverse terms of trade shocks are not only high in Africa but that policy indicators refuse to adjust appropriately in the face of steep fall in export prices. The study, therefore, advocates that African countries should, henceforth, take practical steps to ameliorate the adverse effects of terms of trade shocks by carefully selecting and engaging policy thrusts that suit their particular economic problems and environments.

Autorentext

Benedict Ezema holds a Ph.D in Economics from Nnamdi Azikiwe University, Awka, Nigeria. His research interest includes the open macroeconomy, trade and competitiveness as well as the economics of development.