Topic 3- Trade Policies for the developing nations.pptx

Topic 3- Trade Policies for the developing nations.pptx -...

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Trade Policies for the Developing Nations 1 RMA Class: Topic 4 Continuation
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Developing Nations By real income Advanced nations North America, Western Europe, Australia, New Zealand, and Japan High levels of gross domestic product per capita Longer life expectancies Higher levels of adult literacy Developing nations Africa, Asia, Latin America, and the Middle East 2
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3 Basic economic and social indicators for selected nations, 2007 TABLE 7.1
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Developing-Nation Trade Characteristics Characteristics of developing-nation trade Highly dependent on advanced nations Exports go to the advanced nations Imports originate in advanced nations Trade among developing nations - relatively minor 4
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Developing-Nation Trade Characteristics Composition of developing-nations’ exports Primary products Agricultural goods, raw materials, and fuels Manufactured goods Textiles Labor intensive Modest amounts of technology in their production 5
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6 Structure of output for selected advanced nations and developing nations, 2007 TABLE 7.2
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Developing-Nation Trade Characteristics Developing nations – moving into exports of manufactured products Investment in people and factories Higher educational levels Higher capital stock per worker Improvements in transport and communications Reforms Liberalization of trade barriers 7
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Tensions Between Developing and Advanced Nations Poor nation – to develop Need to take advantage of international trade Problem: advanced world – increased barriers to imports from these developing nations Other problems: Structural weaknesses Nonexistent or inadequate institutions and policies Law and order, sustainable macroeconomic management, and public services 8
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Trade Problems of the Developing Nations Unstable export markets Exports - concentrated in only one or a few primary products Instability of prices and producer revenues Low price elasticity of the demand and supply schedules 9
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10 Developing nation dependence on primary products, 2007 TABLE 7.3
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Trade Problems of the Developing Nations Worsening terms of trade Prices of their exports relative to their imports have fallen Import – manufactured goods Monopoly market Gains in productivity = higher earnings Export – primary goods Competitive market Gains in productivity = lower prices 11
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TRADE CONFLICTS Falling commodity prices threaten growth of exporting nations 2000-2010, increasing commodity prices Favorable growing conditions Benefited producers and governments in many developing nations Higher prices; Rising profits Increasing tax revenues Latin America - economic growth, 5% per year during 2003–2008 Previous 30 years: 3.5% 12
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TRADE CONFLICTS Falling commodity prices threaten growth of exporting nations Recession 2008 – 2009 Advanced economies shrank Lower demand for commodities Developing nations
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