 International trade and development
 If a country can trade effectively with other countries it can give itself access to a range of goods, reduce domestic unemployment and use export revenue to fund domestic projects.
 Trade problems facing LEDCs
 Over-specialization on a narrow range of products.
The entirety of a country’s (many LEDCs) industrial output is based on only a few product types.
Nigeria where petroleum exports are 90% of export revenue and it is instability.
Also, investment in education or health care are not enough, so there are still a lot of people living in rural areas and earning below the poverty line.
 Over-reliance on primary sector outputs.
LEDCs tend to rely on primary sector outputs such as agriculture and natural resources.
Prices tend to be volatile, thereby limiting stability.
Supply is inelastic, so response is difficult.
Vulnerable to external shocks such as weather.
 Inability to access international markets.
Barriers to access to international markets can be both physical and political.
landlocked countries 内陆国家 , water is a mean way for trading.
countries can experience difficulty accessing foreign markets because of trade barriers and protectionism that exist in MEDCs (more economically development)
*Tariff: A protectionist measure that is a tax levied per unit on the price of imported goods and services.
 Trade strategies:
 Import substitution
Countries can encourage residents to buy domestic goods by restricting imports and subsidizing domestic firms (protectionist).
In short term, it allows domestic firms to raise price level and lower production costs in the case of subsidies to boost output.
In long term, firms will improve competitiveness domestically and, eventually, abroad.

 Export promotion
countries can devalue the currency and subsidize export-creating firms.
 Trade liberalization and the WTO
Other countries in the world need to shut off the tariff, and turn down the protectionism, so these places can engage in. WTO 可以帮你出面让另一个国家对你减
少关税。
 Bilateral and regional trade agreements
The East African Community fosters trade by enabling free movement of labour and capital across the borders of member states.
 Diversification
Import substitution
Export promotion
Trade liberalisation
Regional and bilateral PTAs
Diversification
 Decreases dependence on other countries
 Allows opportunity for diversification

Can develop manufacturing
 Creates domestic jobs.

Improves net trade balance X-M and hence increases actual growth

Develops strong manufacturing

Focuses on education and R&D.
 Free-market approach can improve efficiency
 Increases trade between countries
 Promotes industry and infrastructure building

Increases tax revenues.

Promotes regional political stability

Improves efficiency
 Allows countries to make use of regional differences in comparative advantage.
 Reduces reliance on single or only few export categories

Allows opportunity to develop new industrial sectors

Creates jobs.
 Is inefficient
 Is an isolationist policy
 May not decrease dependence if raw materials and. equipment continues to be imported.

Requires heavy government intervention.
 May not result in diversification
 May increase reliance on capital imports.

Success of regional trade policies not always guaranteed

Depends on relative strength of the economy of countries to compete with each other.
Takes time.
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