Question

Discuss at least four of the major trade-specific problems of the Developing Countries

Answer 1

1.Primary Exporting:
Most of the developing countries, in its initial stage of development are exporting mostly primary products and thus cannot fetch a good price of its product in the foreign market. In the absence of diversification of its export, the developing countries have failed to raise its export earnings.

2. Un-Favourable Terms of Trade:
Another problem of trade faced by these developing countries is that the terms of trade are always going against it. In the absence of proper infrastructure and the quality enhancement initiative, the terms of trade of these countries gradually worsened and ultimately went against the interest of the country in general.

3. Mounting Developmental and Maintenance Imports
The developing countries are facing the problem of mounting growth of its developmental imports which include various types of machineries and equipment’s for the development of various types of industries as well as a huge growth of maintenance imports for collecting intermediate goods and raw materials required for these industries. Such mounting volume of imports has been creating a serious problem towards round management of international trade.

4. Higher Import Intensity:
Another peculiar problem faced by the developing countries is the higher import intensity in the industries development resulting from import intensive industrialisation process followed in these countries for meeting the requirements of elitist consumption (viz., colour TVs, VCR, Refrigerators, Motor cycle, cars etc.). Such increasing trend towards elitist consumption has been resulting a huge burden of burgeoning imports in these developing countries, resulting serious balance of payment of crisis.