The consultant will prepare a background paper for the Trade and Development Report 2004 on the relationship between real effective exchange rates and trade performance in selected developing countries. In undertaking this work the consultant will update the statistical material used in an earlier study on "Exchange rate Shocks and Trade Flows in Developing Countries", refine the methodology, and include in the analysis a larger number of countries with different trade structures.
He will provide the statistical upgrade and an analysis of the behaviour of the real effective exchange rate, on the one hand, and merchandise exports and imports, and the trade and current account balances of a sample of about 30 developing countries, on the other. Moreover, the study will differentiate between trade in manufactures and primary commodities, excluding petroleum and petroleum products. To the extent that reliable data is available, the behaviour of real exchange rates and trade performance will be traced back to the 1960s, taking into account changes in economic policies and exchange-rate regimes. It will examine the extent to which the impact of changes in the real exchange rate on the different variables depend on the export structure of an economy, especially with regard to the share of primary commodities and manufactures in total trade. Moreover, the consultant will examine the causes of changes in the real effective exchange rate by analysing the behaviour of the three components of that variable, namely the nominal exchange rate, prices and wages.
Trade and Development Report, 2004, UNCTAD.
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