Terms of Trade Explained in 5 Minutes!
GEOGRAPHY REVISION VIDEOS - GCSE & A'Level
https://www.youtube.com/watch?v=CRiHwukIdvg

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0:00 Many people believe that global trade is influenced by powerful countries that set the terms of trade, often disadvantaging developing nations.
0:11 Terms of trade refers to the relationship between the price of a country receives for its exports and the price it pays for imports.
0:22 In other words, it compares how much a country must spend on imported goods with how much it earns from selling its products abroad.
0:34 Highly developed economies often import primary products, such as raw materials and agricultural goods from less developed economies.
0:46 These raw materials are then processed and turned into manufactured goods, which are sold on global markets at higher prices.
0:56 As a result, the value of products increases as they move through industrialized countries. Over past few decades, the prices of
1:07 manufactured goods have generally risen steadily, while the prices of primary commodities have been more unstable and often lower.
1:18 Because of this, developing countries frequently need to export larger quantities of raw materials to afford the manufactured goods they
1:30 need to import. This situation often means less favorable and unpredictable terms of trade for LDEs.
1:41 However, economic changes can sometimes create opportunities. For example, the rapid industrial growth of China has increased demand for raw
1:52 materials, which has helped improve trade conditions for some parts of Africa, particularly in the East, West, and
2:00 Central Africa. Despite these opportunities, the relationship is not always balanced. A good example is Addis Ababa, in
2:10 Ethiopia, where by 2023, around 400 Chinese-funded investment projects, worth over 4 billion, were operating. These projects included the construction
2:24 of about 70% of the country's new roads. While such investment supports development, it can also increase national debt, which, in Ethiopia's
2:35 case, is already around 60% of its GDP. I hope this short video was useful. If it was, please do give it a like and subscribe to the channel.
2:47 Thank you for watching.