core countries maintained the peripheral countries in a state of underdevelopment for the benefit of the core countries.
A third approach to the dependency issue was an effort to modernize the structuralist model through the introduction of social factors into the analysis, and a consideration of residual terms of trade (Palma, 1978, pp. 881-924). Terms of trade refer to the ratio of the index of export prices to the index of import prices. An improvement in the terms of trade follows if export prices rise more quickly than import prices or if they fall more slowly than import prices. A secular decline is a long term downward trend. Developing countries typically find themselves in situations wherein they export primary products, while they import secondary, or processed, products. Primary products are, in effect, raw, or unprocessed, goods. Thus, a secular decline in the terms of trade for developing countries reflects a change in the export/import price index ratio for these countries, wherein export p
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