Discuss the factors that have enabled developed countries to benefit more from international trade than developing countries.
- Economies of scale. Developed countries produce large quantities at low costs making their goods and services cheaper.
- Quality of goods. Use of modern machinery and processes in developed countries make the quality of good higher than those of developing countries
- Knowledge of international trade. Developed countries have high experience in the trade compared to developed countries
- Value of good. Developed countries trades in high technology expensive goods while LDCs trade in low priced
- Deteriorating terms of trade due to the discovery of synthetic fibres, which compete with natural fibre and increase in prices of capital goods.
- LDCs depend on multinational and these work in favour of their home countries.
- Unstable political system. These lead outflow, increase in foreign exchange expenditure on security and discourage foreign investor.
- International trading policies like IMF and World bank tend to favour developed countries
- When LDCs try to cooperate through regional integration, they are limited by funds. Even some activities of these bodies (e.g. free trade areas) are financed by developed countries which impose very high “tariff walls” on commodities from less developed countries. Therefore LDCs find it difficult to export commodities to developed countries.
CATEGORIES Economics
TAGS Dr. Bbosa Science
