Describe and explain why many LEDCs struggle to increase their Balance of Trade.

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Marie Koeckeis

11B

6-Feb-11

With reference to examples, facts and figures, describe and explain the reasons why many LEDCs struggle to increase their balance of trade. (10 marks)

The balance of trade is the difference between a country’s imports and exports. But around the world there is still a wide imbalance of trade between the LEDCs and MEDCs. This trade gap between LEDCs and MEDCs seems to widen over the years as more and more MEDCs are able to have a trade surplus whereas LEDCs have a trade deficit which might result in making them even poorer or fall in debt. Although 82 per cent of the world’s population lived in LEDCs in 2000, but only contribute 24 percent to the world’s trend. So why are LEDCs not able or struggle to increase their balance of trade.

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The gap between LEDCs and MEDCs exists due to the production of primary goods, such as food, in LEDCs that sell their products to MEDCs at low prices, whereas MEDCs supply secondary and sometimes even tertiary products that can be sold at a much higher price. Although the price of the primary goods increased they did not increased as much as the secondary goods which mean LEDCs are not able to gain enough money to gain a trade surplus.

A reason for the struggle is that LEDCs are not able to increase their selling price as there are ...

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