| Abstract: | There was a sharp decline in Rhodesia's terms of trade immediately following U.D.I., since when the index has been relatively stable. The decline was caused by the premiums on import prices and the discounts on export prices necessary in order to induce trading partners to break sanctions. The meaning of the change in terms of trade is that, in 1972 a 'typical' bundle of Rhodesia's exports would buy only 82, 4% of the 'typical' bundle of imports that it could have bought in 1964. To buy the bundle of imports financed by one bundle of exports in 1964, Rhodesia would now have to increase that export bundle by 22%. This represents a drastic change in Rhodesia's trading position. To estimate its real measure, the cause of this change in relative prices is examined. The country's position is determined not only by the relative prices it receives and pays but also by the quantities it trades. Table, appendix: Method of calculation (value indices; quantity indices; gross barter terms of trade; income terms of trade). |
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