ABSTRACT
The deterioration in the terms of trade plays an important part in the growing international inequality in income distribution. Within certain limits, trade questions can be divorced from the question of total redistribution from the rich to the poor areas; but one is not talking about marginal variations in specific trade, either in volume or in value terms, but about grosso modo changes in the balance of payments big enough to affect the rate of development and economic health of the poorer developing countries. Indeed, rational judgement on the relative merits of trade and aid will in the end depend on the diagnosis of the causes of the worsening of the terms of trade. The stimulation of trade as against aid has the further drawback in that it is not necessarily connected with the creation of conditions favourable to development.
