Problems of Developing Countries in International Trade
Developing countries and trade
Introduction:
International trade is an important source of foreign income in almost all developing economies, these countries are referred to as developing due to their low GDP level and they are faced with high levels of poverty and unemployment, according to David Ricardo and Adam smith international trade plays a crucial role in the development of an economy, the Mercantile theory of development states that trade led to the wealth of nation.
This paper discus the various problems that the developing countries face in international trade and their effect on the agricultural, industrial and service sectors. Some of these problems are external while
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Quality and standards:
Developed countries and developing countries tradfe partners set high standards for products exported, this lead to frequent ban on products produced in developing countries, A good example is the ban on fish imported from east Africa during Idian Amin reign, the reason was because the dictator had all the disabled people thrown into lake Victoria and therefore it was unhealthy to import fish from the lake.
From the above example it is clear that developing countries will ban imports due to various reasons, in the example it was evident that most fish exported from east Africa was tilapia, tilapia fish is a glazer and fed on sea weed and not meat, however due to the act of the dictator fish imports were banned for health reasons.
Other products have also been faced with the same problem, example beef from developing countries where a certain disease outbreak may result into a total ban in the exports of these products even after health checks on the slaughtered animals. This is a major draw back to the agricultural
In extreme circumstances, it is frowned upon, but in lesser degrees, it is accepted as part of the cost of doing business. Profit margins are continuously rewarded, while countries that have abysmal human right records are producing goods for countries that ban such practices. Just recently, a company that produces touch screens for electronic devices, which are made for a company that uses a logo not comparable to an orange, was punished for using a banned chemical to clean the products. Nearly a month later, the company is still using it and as a result, one employee has died from exposure and others have shown adverse effects. Turning the clock back nearly 300 years, we find similar circumstances for Ireland, having tariffs placed on products sold to England. Higher costs mean lower margins and less importance placed on the conditions in which the products are made to help the profit margin. The desperate have to keep their jobs to pay exorbitant rent to absentee landlords, and greedy rulers. So what’s new? Why can we not seem to break this cycle?
Following World War II, economic policies were marked by two major trends. On one hand, industrialized economies gradually removed trade barriers. These policies were based on the idea that free trade is not only a factor for economic prosperity of nations, but also for the promotion of peace. On the other hand, economic policies of many developing countries with the exception of few countries in Southeast Asia have been conditioned by the belief that the key to development rests in the establishment of a powerful manufacturing sector, and that the best way to create such an area was to protect local industries from international competition through substitution imports policies.
One of the major advantages of trading is that it allows producers to concentrate or specialize their work in the type of goods they produce best. When people decide to specialized in a specific profession an become doctors, farmers, teachers, or any other profession within an economy, they will be able to produce goods and offers different services that can be trade for any goods or services they may need. In this same way countries can become specialized in the production of specify products and/or services and trade those with other countries. However, trading and importing products and services from other countries also has its disadvantages. As a result of the different products imported governments impose certain restrictions and limitations to protect the domestic production and market of every country involve in any kind of trading transactions. Governments have imposed taxes on trading transactions adding them to the cost of importation, and have the purpose of restricting and/or limiting the imports of goods and services into a country. These government
Trading is very important economic factor. Trade between different countries depends upon different factors. There are some factors due to which bilateral trade between two states is enhanced. On contrary, there are some factors which restrict or reduce the trade between two countries (Meyer, 2011). Factors which enhance trade include different cultural, political, geographic and economic aspects which are common between the 2 countries involved in bilateral trade with each other. While trade is reduced or restricted, if two countries are completely different culturally, politically, geographically and economically (Siegel, 2011). For example, trade between two countries, having common boarder, currency, per capita income et cetera, will be lot more high than those countries which do not share these factors common with each
In my opinion cheap prices for imported goods is benefit for the citizens of developed country, but it carries some negative impacts. I assume that low wages in the developing countries cause of not providing the desired quality of product manufacturing and sanitation. The spread of the diseases can occur in food hubs that are engaged in distribution of food in the wholesale and retail chains. It is place where control of quality must be strong. The solution of this problem may become international supervisory structure in the field of production and
In the midst of the help from the extremely advanced transportation, modern production methods, rapid industrialization and the increasing facilities of outsourcing of trade and services the international trade organization is increasing and decreasing very fast in the globe. The international trade account has a good distribute of a country’s gross on domestic product. It is in addition one of most important foundations of income designed for the developed as well as to developing country. For the reason that of many country benefits from the international trade approximately every one in the
The Australian live sheep trade is a primary example. The welfare of the sheep would be greatly improved if the sheep were slaughtered in Australia and the meat was shipped to the Middle East. The problem is that there are great economic forces working against this. People in the Middle East dislike the taste of chilled meat and they are
This is because many developed countries may use protectionist measures to prevent developing countries from having free access to certain markets (which may include the markets for the developing countries’ primary product) thus making it more difficult for poorer countries to grow and develop.
The fact that the restrictions on materials caused by the trade carried out by the people and even countries vague for the majority of people. This monopoly is beneficial for the minority of people. The solution lies in knowledge. You should know that our minds are naturally inclined to the conventional objects. This means new is always difficult to believe. Even that is real and good. But will need time in order to get used to it. The reality is recognized and enters the familiar
In this I am going to assess the methods to increase trade between countries and the methods to restrict trade between countries. When asses the methods of encouraging and restricting trade I will talk about the purpose for the methods of promoting and restricting international trade, identify how and why they might be used and I will decide how useful each method is giving appropriate reasons for it. International trade is the exchange of goods and services between countries.
Some of the countries with surplus commodities may dumb them on international markets at a low price. Under such conditions, some of the efficient industries can might find difficulties in competing for long period. Furthermore, countries whose economies are mostly rural will face unfavourable terms of trade. For example, ration of export prices to import prices. Which means that their export income is more smaller than their import payments the make for high value added imports, as it leads to subsequently large foreign debt levels.
International trade has been in existence throughout history and has an economic impact on the participating countries. Trade in most countries has a share of the Gross Domestic Product (GDP) and helps to boost the
Free trade has long be seen by economists as being essential in promoting effective use of natural resources, employment, reduction of poverty and diversity of products for consumers. But the concept of free trade has had many barriers to over come. Including government practices by developed countries, under public and corporate pressures, to protect domestic firms from cheap foreign products. But as history has shown us time and time again is that protectionist measures imposed by governments has almost always had negative effects on the local and world economies. These protectionist measures also hurt developing countries trying to inter into the international trade markets.
Regulation in many cases is a good thing to implement. Many times it is used to sort of even the odds between the countries that have a lot and those that have a little. But so frequently can a little regulation turn into too much regulation. When this happen it through off the natural flow of trade. Although trade regulation can unfortunately limit trade with some countries, which could result in less diversified and productive countries, trade protection is still safer for developing countries because small developing countries cannot compete as effectively as the more developed industrialized countries. These two types of countries have two completely different levels of ability and capacity to trade. If a developing country has one main industry, it cannot risk trading with large developed countries that have many huge similar industries. It is not fair to force these developing countries to compete globally if they are inexperience and are not yet prepared to trade in this manner because of lack of resources, wealth, and labor that these experienced developed countries have.
The international trade of goods across the world accounts for approximately 60% of the world Gross Domestic Product (The World Bank, 2014). A great proportion of goods transactions occur every second. The primary question is whether international trade benefits a country as an entirety, and, if so, why would a country implement protective trade policies to restrict particular exports? To address this question, this essay aims to explore the impact of trade on various economic stakeholders, including consumers, producers, labour and government and, furthermore, will compare models and theories with reality to ascertain the true winner/ loser in the international trade market.