Trade

 

 

What is it?

•The act or process of buying, selling or exchanging commodities at either wholesale or retail within a country or between countries

•Economic growth is essential to economic development of a country

•Economist believed that if the south industrialised thent hey would develop, but this was based on 3 assumptions:

!. Adaption of Western Style Capitalism

2. Economic growth ‘trickles down’ to give more investment

3. Promotion of free trade (markets as open as possible)

 

Advantages:

•Trade has a long term impact upon international co-operation

•Improves a countries economics and therefore creates jobs (multiplier effect)

•Allows for raw materials to be redistributed around the world

•Allows countries to import goods they cannot produce themselves

•Necessary for LDCs who require medicines

 

Disadvantages:

•Local businesses may be forced to close as they can’t compete with large Multi-National Companies

•Exploitation and unfair handling of staff in developing countries without working rights

•Leakages of money through exportation to home nation rather than being reinvested in that country

•Can widen the development gap (Core Periphery model) as the profit doesn’t ‘trickle down’ to the majority of the population

•Protectionism – governments apply to tariffs to foreign imports making them more expensive to consumers

•Many poor countries depend on agricultural exports, but they cannot make much profit as richer countries subsidise their pwn farmers (CAP) and negotiate the terms of trade

•The debt of many poorer countries puts them in a difficult position which can include cuts to spending on health and education

•LLDCs have difficulty trading as they have no ports