BW037 and 038

HL2 BW037

Name and explain the four international barriers to development

1- over-specialization on a narrow range of products

 Some countries are very dependent on a certain type of good usually a primary good

 They become dependent on it and the rise and fall of its price

 Thus they face vulnerabilities to it

 2- price volatility of primary products

 Prices of commodities on the world market tend to be ineleastic

 Makes it hard for producers in the developing world to make plan ahead

 3- inability to access international markets

 Protectionism in other countries harm the developing countries ability to export thus they cant make a living and get education etc.

 4- long term changes in the terms of change

 Changes in the relative price of exports and imports can have a negative effect on their importing

Identify and briefly explain the five trade strategies that affect growth and development

- import substitution

 Stragetegy in which developing countries should attempt to produce as much as they can locally so the country will economically grow and they will be able to become competitive

 Conditions-

 1. government needs to adopt a policy of organizing the selection of goods to produce locally

 2, subsidies are ready available

 3. gov needs to implement aprotectionist system with trade barriers to keep out forign import

 Advantages- protects domestic jobs

 - protects the local culture and social habits

 Protects the economy from bad influences  of multi coporations

 Disadvantages-

 In the long run economic growth mught be lower

 Cannot experience the benefits of comparite advantage

 Leads to inefficiency

 Leads to high rate of inflation

 May cause other countries to take retalitatory protectionist methods

 2- export promotion

 Increasing exports lead to increased GDP

 Will need to adopt certain policies

 1. liberalized trade

 2. liberalized capital flow

 3. a floating exchange rate

 4. investmant in the rovisions pf infratstucture

 5. deregulation and minimal gov intervention.   

 Cons- protectionism in other countries becasue of cheep prices from the asian tigers

 - government have to intervene to build highways, infrastrucvtuere

 - MNCs may have to much power

 - income inequality

 3- trade liberalization

 Reforms-

 Fiscal dicipline

 Spending on health and educatipn

 Lower tax

 Liberalize interst rates

 A competive exchange rate

 Trade liberalizaation

 Livberalization of FDI inflows

 Privatization

 Deregulation

 Securer propety rights

 May lead to bad workign environments and inequality

 4- bilateral and regional preferential trade agreements

 More agreements made more trade can occur

 5- diversification

 Diversifying their exports, exporting more than one thing

Explain the single that encourages development but does not necessarily benefit growth                  

 Fairtrade organization

A movement which strives for fair treatment for farmers. In a fair trade agreement, farmers, who in other situations might be more susceptible to the will of the purchaser, will negotiate with the purchasers in order to receive a fair price for their products. Farmers who engage in fair trade also aim to pay their workers a fair price, and engage in environmentally-friendly practices.