Free Economics Dissertations - The Price For Primary Products Would Be Less Price Sensitive, Thus An
The price for primary products would be less price sensitive, thus an increase in the demand for output of low-income country exports would only come from a large disproportionate fall in prices.
They output for low income countries would be subject to a greater squeeze on prices and margins as primary products were subject to low barriers to entry.
It must be noted that this focus on the commodities-manufactures terms of trade has been the subject of extensive debate. It is now widely accepted that for most part of the twentieth century, the barter terms of trade did indeed run against commodities, and they were more in favour of manufacture’s.
Conclusion
In summary it can be said that international trade has led to economic growth and development however, it has not been at the same pace for developing and developed nations alike. Advancement in technology has enabled developed nations to benefit from it, however, LDCs have not gained much advantage, and instead it has adversely affected their terms of trade. It must be noted for economic development to be meaningful; the pace of development must be standard for all. Developed countries are now realising the importance and are taking the responsibility to ensure that terms of trade are not adverse for LDCs. Thus in conclusion it can be said that international trade has undoubtedly played a significant role in economic development, however there have been adverse movements in the terms of trade of countries which have depended mainly on primary products.
BIBLIOGRAPHY
Gillis, M., Economics of Development, (2001), W.W.Norton & Company Ltd.
Gwartney, James D., Stroup, Richard L., and Sobel, Russell S., Economics Private and Public Choice, (2000), Ninth Edition, The Dryden Press.
Meier, G.M. and Rauch, J.E., Leading Issues In Economic Development, (2000), Seventh EditionOxford University Press
Perkins, Radelet, Snodgrass, Gillis and Roemer, Economics of Development, (2001), Fifth Edition, Oxford University Press.
Todaro, M.C. and Smith S.C., Economic Development, (2003), Eighth Edition, Pearson Addision-Wiley
Yotopoulos, P., and Nugent J., Economics Development, (2004), Cambridge University Press
Papers, Journals and Articles
DTI, and HM Treasury, Trade and the Global Economy: The role of International Trae in productivity, economic reform and growth, May 2004
Harris, C.J., and Kulkarni, K.G., The Role of International Trade and Policy in Economic Growth: A case of Tanzania, Global Business Review 5:2 (2004), Sage Publications
Kaplinsky, R., Revisiting the Revisited Terms of Trade: Will China Make a Difference?, Institute of Development Studies
Jacobsen, M, Werth, A., and Vorley, B.
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