Developing countries that concentrate production in agricultural products or raw materials may face a secular decline in their international terms of trade due to

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All of the above factors can contribute to a decline in international terms of trade for developing countries that rely heavily on agricultural products or raw materials. If demand for these products is weak in developed countries, or if new sources of supply are introduced through export expansion policies, this can drive down prices and reduce the ability of developing countries to earn income from these exports. In addition, inelastic demand for these products means that even when prices fall, demand may not increase enough to offset the loss in revenue for exporters.

Developing Countries That Concentrate Production in Agricultural Products or Raw