|Indicator Name||Net barter terms of trade index (2000 = 100)|
|Long definition||Net barter terms of trade index is calculated as the percentage ratio of the export unit value indexes to the import unit value indexes, measured relative to the base year 2000. Unit value indexes are based on data reported by countries that demonstrate consistency under UNCTAD quality controls, supplemented by UNCTAD's estimates using the previous year’s trade values at the Standard International Trade Classification three-digit level as weights. To improve data coverage, especially for the latest periods, UNCTAD constructs a set of average prices indexes at the three-digit product classification of the Standard International Trade Classification revision 3 using UNCTAD’s Commodity Price Statistics, international and national sources, and UNCTAD secretariat estimates and calculates unit value indexes at the country level using the current year's trade values as weights.|
|Source||United Nations Conference on Trade and Development, Handbook of Statistics and data files, and International Monetary Fund, International Financial Statistics.|
|Topic||Private Sector & Trade: Trade indexes|
|Statistical concept and methodology||The terms of trade index measures the relative prices of a country's exports and imports. There are several ways to calculate it. The most common is the net barter (or commodity) terms of trade index, or the ratio of the export price index to the import price index. When a country's net barter terms of trade index increases, its exports become more expensive or its imports become cheaper.|
|Development relevance||Data on international trade in goods are available from each country's balance of payments and customs records. While the balance of payments focuses on the financial transactions that accompany trade, customs data record the direction of trade and the physical quantities and value of goods entering or leaving the customs area. Customs data may differ from data recorded in the balance of payments because of differences in valuation and time of recording. The 2008 United Nations System of National Accounts and the sixth edition of the International Monetary Fund’s (IMF) Balance of Payments Manual attempted to reconcile definitions and reporting standards for international trade statistics, but differences in sources, timing, and national practices limit comparability. Real growth rates derived from trade volume indexes and terms of trade based on unit price indexes may therefore differ from those derived from national accounts aggregates.
Trade in goods, or merchandise trade, includes all goods that add to or subtract from an economy's material resources. Trade data are collected on the basis of a country's customs area, which in most cases is the same as its geographic area. Goods provided as part of foreign aid are included, but goods destined for extraterritorial agencies (such as embassies) are not.
By international agreement customs data are reported to the United Nations Statistics Division, which maintains the Commodity Trade (Comtrade) and Monthly Bulletin of Statistics databases. The United Nations Conference on Trade and Development (UNCTAD) compiles international trade statistics, including price, value, and volume indexes, from national and international sources such as the IMF’s International Financial Statistics database, the United Nations Economic Commission for Latin America and the Caribbean, the U.S. Bureau of Labor Statistics, Japan Customs, Bank of Japan, and UNCTAD’s Commodity Price Statistics and Merchandise Trade Matrix. The IMF also compiles data on trade prices and volumes in its International Financial Statistics (IFS) database.|
|Limitations and exceptions||Collecting and tabulating trade statistics are difficult. Some developing countries lack the capacity to report timely data, especially landlocked countries and countries whose territorial boundaries are porous. Their trade has to be estimated from the data reported by their partners. Countries that belong to common customs unions may need to collect data through direct inquiry of companies. Economic or political concerns may lead some national authorities to suppress or misrepresent data on certain trade flows, such as oil, military equipment, or the exports of a dominant producer. In other cases reported trade data may be distorted by deliberate under- or over-invoicing to affect capital transfers or avoid taxes. And in some regions smuggling and black market trading result in unreported trade flows.|
|License Type||CC BY-4.0|