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i. Nature of the commodity being exported: a country exporting primary products is likely to experience unfavorable terms of trade compared to another that exports finished / manufactured goods.
ii. Change in demand for country’s exports: increase in demand for a country’s export is likely to lead to favorable term of trade compared to another whose demand for its export has reduced.
iii. World economic orders: a country that is a member of world decision-makers in regard to price fixing, is likely to experience favorable terms of trade compared to a country that has not joined such a group
iv. Total quantity supply. A country exporting a commodity that is in short supply in the world market is likely to experience favorable terms in terms of trade compared to another country that exports a commodity that has excess supply in the world market.
v. Restriction by trade partner: A country exporting to a trading partner who has restricted its exports is likely to experience unfavorable terms of trade if it has not retaliated by restricting its imports from such a partner.
joseph rimiru answered the question on December 28, 2017 at 14:02
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