The Impact of the Crisis on World Prices and Trade
Changes in international trade flows and world prices are major channels through which the global financial crisis hits developing countries. How these trade shocks and terms-of-trade trends affect economic performance and welfare in low-income countries depends on country-specific characteristics, especially initial trade patterns.
The project uses a global trade model to gauge the impact of a slowdown in economic activity in the OECD on trade performance, world prices, and aggregate welfare in the rest of the world – with a particular focus on the least developed countries in sub-Saharan Africa and Asia. The analysis also indicates the amount of external assistance that would be required to compensate adversely affected countries for the trade-related crisis impacts.