The use of trade is the most important tool to achieve economic growth in LEDCs. To what extent do you agree with this statement?

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‘The use of trade is the most important tool to achieve economic growth in LEDCs.’ To what extent do you agree with this statement? (40)

        With approximately half the world living on less than $2.50 per day and 1.7billion people living in absolute poverty, development in order to improve living conditions and provide people with at least the basic necessities is a top international priority. There are 3 widely accepted methods of achieving economic growth: Reducing/Canceling debt, Improving trade and International Aid. All of them are important tools, but the potential profits and self-dependency of trade makes it the most favourable tool.

        LEDCs are almost solely dependent on primary industry, in particular exporting grown produce though agriculture. Trading raw materials is the first step on the ladder for countries to develop, so as a result it is the most important tool to achieve economic growth. Promoting trade in LEDCs brings many benefits. Ultimately trading brings in revenue, which enables infrastructure to be built/improved, enabling even more production and thus more trade, which leads to more imports and exports. Promoting trading helps to make an LEDC more self-sufficient, and not reliant upon international help. This is a long-term solution to the development issues currently plaguing many countries, as it helps puts the infrastructure in place to allow a similar period of industrialisation like in Britain at the end of the 19th century. However, there are critics who doubt that that trade is the answer. They believe that less developed countries cannot be competitive in the global market because of the great difference in wealth between them and the developed countries, as they cannot invest in industrial and technological development at the same rate as richer countries. Many poorer countries also depend on agricultural exports which have experienced significant drops in price, as the market has been flooded with similar products from LEDCS across the globe. And finally, they believe that trade only benefits the wealthy members of society and that the wealth doesn’t ‘trickle down’ to the majority of the population, resulting in the gap between rich and poor widening.

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        Whilst trade must be promoted in LDCs, it is just as, if not more important, to preach free trade and fair trade in developed countries. Many farmers in developing countries are struggling to make profits as influential trading blocs restrict them. The most significant examples are the trading blocs of the EU and NAFTA. For example the EU subsidises local sugar beet farmers (the European Common Agricultural Policy) and as a result sugar cane farmers in LDCs lose out, and the USA subsidises its own cotton farmers so that cotton growers in Mali can’t compete. Similarly, the EU heavily taxes ...

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