Question

Mention at least two trade problems of the developing nations. What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies? Which strategy do you think works the best? Please make sure to provide a real-world example and describe how a specific country adopted one of these strategies.

Answer 1

Developing countries are facing problem in international trade:

• Term of trade is deteriorating in developing countries. These countries export relatively primary goods, while import manufactured so term of trade acts against these countries.
• Developed countries have imposed many tariffs and non-tariffs barriers on goods imported from developing countries. So exports of developing countries are experiencing rise.

Growth strategies of developing countries:

• Export promotion
• Import substitution: producing such items at home which were hitherto being imported.
• Foreign direct investment.

Few countries such as India and China have been successful in developing through the export and import substitution. But all other countries in Africa Continent failed to generate enough growth rate with help of export. These countries are facing unstable political environment.

Now these countries are vying for FDI, FDI could be right strategy for all developing countries. these countries need to improve their index of ease of doing business and provide stable government. FDI would adequately address the issue of foreign exchange and investment simultaneously .