Who pays more in the international market? An examination of terms of trade of the countries of Latin America and the Caribbean

Abstract

Recent developments around the world have necessitated the importance of developing countries to intensify their participation in the global marketplace. We would like to know, however, if the playing field is level for all, especially for developing countries. Are some paying more than their fair share in the international market? To this end, this paper examines the terms of trade of the developing countries of Latin America and the Caribbean (LAC) and analyses these in relation to their tariffs and relative volume of trade in the international market. Results show that among the countries of Latin America and the Caribbean. Antigua and Barbuda pays the most, while Venezuela pays the least in the international market. A negative and significant correlation exists between net barter terms of trade and volume of trade as percentage of GDP but not with tariffs. Policy implications of these results for the governments of the countries of Latin America and the Caribbean are discussed, and directions for future research are given.