Second, there has been an improvement in the terms of trade the ratio of export prices to import prices of about 8% since 1996.
Hence, as the price of its export commodity fluctuates, the tropical country experiences large fluctuations in its "terms of trade," the ratio of export prices to import prices, often with painful effects on the domestic economy.
Their current-account deficit is rising even though their terms of trade (the ratio of export prices to import prices) have jumped by 25% since 2005 (see chart on previous page).
It must be given the necessary resources to help rescue those who fall into difficulties either through over-optimistic borrowing (as in Eastern Europe), market panic, or collapse of export prices (now afflicting much of the developing world).
{text{dev}}.({text{dp}}).) The time-varying standard deviation of export prices is estimated by using an integrated generalized autoregressive heteroskedasticity (IGARCH) model.
In the case of goods made from imported raw materials, the rules required that the import content not exceed 50percentt of the export price of the finished product.
With the recent reforms, 58 exporters compete for Jjakiras beans, and he pockets 80% to 85% of the export price, the highest percentage in the world, says Andrew Potter, managing director of recently established Cargill Uganda Ltd.
In Uganda the Wabenzi saw to it that farmers like Jjakira could sell their beans only to the Coffee Board, which paid them 20% of the export price, the rest lining the pockets of the ruling thugs.
