• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Patterns in world trade

Extracts from this document...

Introduction

PATTERNS IN WORLD TRADE by There is simply no way that LEDCs can catch up with MEDCs. This is mainly due to the fact that most LEDCs are only 'allowed' to export primary products (which may fluctuate in price) and must therefore import secondary products. One example of this is that Gabon exports a tree for $1. This is then exported to France and made in a factory into a wooden bench. This is on sale in France for $500, but, if exported to Gabon, would be around $600. One can see from this example why LEDCs always lose out if they only export primary and import secondary products, because they build up a trade deficit. MEDCs may charge heavy import duties on products not from MEDCs and may have special trade agreements and free trade zones with other MEDCs, such as the European Union, which make it far cheaper to trade with themselves. Another factor is that, because they cannot naturally compete on costs with LEDC raw material producers because of factors such as higher wages, MEDC raw material producers are often subsidised. One example is that an apple grown in Senegal may cost under 1 Eurocent, yet one grown in Germany may cost around 5 Eurocents. Because of subsidy from the EU, however (farmers are possibly the only type of workers that are subsidised), they may cut the cost down to 0,5 Eurocent. An additional factor is that any more expensive, raw materials can easily be artificially and synthetically produced if there is no way that an MEDC can produce it cheaper than an LEDC. ...read more.

Middle

45% of clothes from Africa face the same trading barriers as only 5% of clothes from MEDCs to trade with MEDCs. Because of all of this, from 1980 to 1996, Africa's percentage in World Trade has HALVED. African goods exports only grew by 2% (the world average was 7% and the Asian average was 10%). In 1980 African trade accounted for 5.9% of World Trade (still small considering it is around 20% of world landmass) but fell to 3% by 1990 and then 2.3% in 1996. However, for a while, there was a sense of optimism. After years of negotiations called the Uruguay Round, which tried to allow LEDCs into the economy, there was an African trade growth of 13% followed by 16% the next year. However, this is such a small figure as the percentage of African trade is so small. It really needs growth of a few hundred percent to compete with MEDCs. There is simply no way that LEDCs can catch up with MEDCs. This is mainly due to the fact that most LEDCs are only 'allowed' to export primary products (which may fluctuate in price) and must therefore import secondary products. One example of this is that Gabon exports a tree for $1. This is then exported to France and made in a factory into a wooden bench. This is on sale in France for $500, but, if exported to Gabon, would be around $600. One can see from this example why LEDCs always lose out if they only export primary and import secondary products, because they build up a trade deficit. ...read more.

Conclusion

only with the colonial powers that they were owned by, and they also do not have a varied market and may depend on similar or the same products as their neighbours. For instance, many Persian Gulf states all depend on oil and have not used oil money to vary their economies. Therefore, not only does their wealth depend ONLY on world oil prices but they will be just as poor as before when oil runs out. The main reason for Africa's trade problems is that rich countries have over 3 times as many trade barriers as middle income countries. Another reason is that up to 40% of total earnings are spent on transportation of goods to and from far away countries. 45% of clothes from Africa face the same trading barriers as only 5% of clothes from MEDCs to trade with MEDCs. Because of all of this, from 1980 to 1996, Africa's percentage in World Trade has HALVED. African goods exports only grew by 2% (the world average was 7% and the Asian average was 10%). In 1980 African trade accounted for 5.9% of World Trade (still small considering it is around 20% of world landmass) but fell to 3% by 1990 and then 2.3% in 1996. However, for a while, there was a sense of optimism. After years of negotiations called the Uruguay Round, which tried to allow LEDCs into the economy, there was an African trade growth of 13% followed by 16% the next year. However, this is such a small figure as the percentage of African trade is so small. It really needs growth of a few hundred percent to compete with MEDCs. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    ESSAY: Fair trade or free trade?

    5 star(s)

    In South Africa, HIV problems are common for the whole population. As a consequence of the TRIPS, US companies are allowed to maintain high prices (greeting of patents), while South Africa is not allowed to produce drugs in other way and is obliged to buy the drugs from the US.

  2. Colonialism and Colonies.

    be shipped on vessels constructed by English shipbuilders and that at least three-quarters of the ships' crews had to be English. Sometimes such regulations backfired. During the French and Indian War (1754-1763) in North America, the British Parliament sought to increase revenues to pay the costs of defending the American colonies.

  1. European background to the scramble for Africa (1850 to 1900)

    The region is secured by 1984. * 1896 - The world is getting more and more glimpses of what Leopold's regime is like, when natives from Britain's colonies who worked in the CFS are asked about the condition of the state.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    and phytosanitary measures, customs valuation and import licensing, furnish some of the regulatory infrastructure for tackling behind-the-border trade restrictions and taking better advantage of trade opportunities. This is especially important for developing countries that lack such regulatory infrastructure. As for developing countries, an increasing number (but still a relatively small minority of 20-25)

  1. Distribution of Income and Wealth HSC Notes

    * For non-English speaking countries, this is very different. Recent migrants from such countries have lower income levels than Aus born people. This reflects that they may not be able to obtain better-paid jobs, as they do not have a good command of language, even if skills are similar.

  2. Carbon Credit Trading

    for Reconstruction and Development have entered what we call the "wider emissions trading market" by funding emission reduction projects under the Kyoto Proctol (Merrill & Jain, 2005). Consequently, surplus carbon credits are generated which can then be traded on carbon markets.

  1. Free essay

    Globalisation and changing career patterns

    It's certainly one of the buzzwords of our generation. The word 'globalisation' is a relatively new one, with the term originally attributed to Theodore Levitt in his article for the Harvard Business Review in 1983. However, the concept can actually be traced back centuries, even to ancient times. Held et al (1999)

  2. Will trading fairly reduce world poverty?

    Raw cotton carried no import tax. This raw cotton was now used in Lancashire to mass-produce cloth at a price that was cheaper than cloth made in India. The result was that people in Lancashire had jobs, the mill owners and shippers made fortunes whilst the Indian textile workers lost their jobs and became poor.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work