Question

Some argue that the greatest issues for the developing countries is economic development and trade with developed countries. Is there persuasive evidence to support this view?

Answer 1

Most of the developing countries having agriculture based economy with exporting of cacao, sugar or coffee. These goods have high competition in the foreign market. The prices are sensitive to change in demand and supply. If there is high fluctuation of price level, it will affect the terms of trade of the developing countries. This makes negative effect in domestic market. There is a great controversy emerged in trade between developed and developing country. Foreign labour abolishes the native labour needs and unemployment created.
There is high level exploitation of resources in developing countries. This will affect the productivity in domestic countries. The proportion of GDP for both of this country is different. The international trade create dual economy. The effects of foreign factors create highly unbalance structure of production in both countries. The excess dependence of foreign countries leads to cyclical fluctuations in most of the advanced countries. The adverse effect of foreign investments only leads to high level export purposes which neglect the domestic sector. The high foreign inflows make the people remain backward in the country. There is adverse effect of demonstration effect in the developing country. The desire for luxurious goods and higher standard of living will leads to low saving rate in developing countries.