Evaluate the view that ‘unfair terms of trade’ are the primary cause of poverty in LDCs (Least Developed Countries). What is the aim of this report? The aim of this report is to evaluate to what degree unfair terms of trade are one of the main causes of poverty in LDC nations. This view is going to be evaluated through different case studies, which show different views of unfair terms of trade. What are ‘unfair terms of trade’? Trade involves the importing of primary products and exploiting of goods and services. Over the past few decades, MEDC nations have dominated the trade market with MEDC companies, which are now market leaders. Unfair terms of trade are when MEDC companies take advantage of the producers disadvantage by exploiting them. Exploitation can be created in several ways. It could be in the form of cheap labour, or unfair prices. Trade needs to be unrestricted by trading blocs, tariffs and subsidies to make it fair. Fair trade is an ethical approach to conventional methods of trade. It is like a trading partnership, which targets sustainable development for the producer of the product in an LDC, who is usually at a disadvantage. The North And South The development gap separates the North and South. This means that the countries in the North are more developed economically and physically then the countries in the Southern hemisphere. However, there are colonial links between countries in the North and South, and even with decolonisation occurring, which ended the North’s political domination of the south, it was replaced by economic domination. The table below shows how these links occurred. (Information adapted from Global Challenge A2 Level Geo) Trade Importing primary products; exporting goods and services Labour Sending out settlers, civil servants and executives; later bringing back cheap labour. Foreign Investment Investing particularly in agriculture and mining projects. Aid Assisting less developed parts of the world for motives, ranging from ‘doing good’ to ‘being greedy’. Doing good is illustrated in the work of the missionaries, and being greedy is by granting high interest or tied loans. Four Traditional Links of Internationalisation (Global Challenge A2 Level Geo) The North dominates global trading of resources and products. The pattern of world trade ... ... middle of paper ... ...ive slump in coffee price, the Ethiopian coffee farmers are facing a sharp increase in poverty and hunger. The rise in poverty level among Ethiopian coffee farmers has developed into another unexpected problem. Many farmers have abandoned coffee and started growing a more profitable crop: Khat, a leafy narcotic often mentioned as the region’s version of moonshine. Khat is chewed legally by millions of people in the Horn of Africa and Middle East. However, in Britain and United States (where it is illegal), Khat can fetch as much as $200 a pound. Ethiopia’s Oromia Coffee Farmer’s Cooperative Union (OCFCU) aims to help small-scale coffee farmers take advantage of the Fair Trade coffee market, the viable alternative trade strategy. It was set up to help the 100,000 farmer families working in Oromia cooperatives to get through the difficult price crisis. In only its third year, the OCFCU is already starting to return 70 percent of its gross profits back to the Fair Trade cooperatives, in order to help coop members. (Case Study was adapted from http://www.globalexchange.org) Annual Average Coffee Indicator – 1965-2001 Adapted from (http://www2.gsb.columbia.edu)
During the postclassical period, the expansion of trade had different interpretations around the world. Varying societies all reacted to trade in different ways due to how they viewed the situation. It had caused conflict in few areas around the world and also created peace as well as harm. Some communities had pros and cons to trade, like everything else. Some reasons for the positive or negative feedback on trade was due to religion, and or the philosophical system. Religion and the philosophical system was both pros or cons for trade in different civilizations. Religion helped with the spread of different ideas and religions across a mass area. Yet it had a negative input because then people fought, thinking their religion was more
In this paper I will summarize the arguments for and against trade protection for United States industries. Among the measures that can be used to restrict foreign trade are tariffs and trade quotas. Industries can also get nontariff barriers, miscellaneous legislation which give domestic products an advantage. In general, experts agree that restricted foreign trade benefits workers and domestic businesses, while under free trade consumers have a greater quantity and quality of choices available to them. [1] I will also look at arguments for and against NAFTA, an important trade agreement between the countries of North America.
In December of 1992, Presidents Salinas (Mexico), Bush (U.S.) and Prime Minister Brian Mulroney of Canada signed the North American Free Trade Agreement (NAFTA). The Mexican legislature ratified NAFTA in 1993 and the treaty went into effect on January 1, 1994, creating the largest free-trade zone in the world.
Mandle, J. R. (2003). Globalization and the poor. Cambridge: Cambridge University Press. Table 7.2, p. 108
In January 1994, the United States, Mexico, and Canada implemented the North American Free Trade Agreement (NAFTA), forming the largest free trade zone in the world. The goal of NAFTA is to create better trading conditions through tariff reduction, removal of investment barriers, and improvement of intellectual property protection. NAFTA continues to gradually reduce tariffs on set dates and aims to eliminate all tariffs by the year 2004. Before NAFTA was established, investing in Mexico was a difficult process. Investors needed the Mexican Government's approval and were also required to meet specific investment guidelines. These requirements necessitated investors to export a set level of goods and services, utilize domestic goods and services, and transfer technology to competitors. Under NAFTA, investors no longer need government approval to invest and are treated as domestic investors. NAFTA has also increased intellectual property rights and allowed companies to obtain patents in Mexico and Canada. In the past, companies were hesitant to export research and development intensive goods; with increased intellectual property protection, however, exports of these goods have shown a definite increase. As a result of better trading conditions, exports and imports of most other goods have increased along with the research and development intensive goods. In Mexico, the elimination of investment barriers has allowed investment to expand. Increased trading and investment has then created many jobs, raised the Gross Domestic Product, and lowered consumer prices.
Unlike the North – a term in vogue today, among others, for highlighting the difference between the rich, industrialised nations of mostly Western Europe, North America, Australasia, and the rudimentary economies of Latin America, Asia and Africa – underdevelopment, characterised by low income levels, poverty, low living standards and other socio-economic ills seem to be a defining feature of countries in these regions, collectively described as the Global South. Thomas (2003), Hershberg and Moreno-Brid(2003), and, Solimano(2005) suggest, for instance, that the socio - economic structure of most Latin American countries remains defined by vast inequalities in income and wealth distribution, poverty, volatile growth, high mortality rate and a high level of economic vulnerability. In Asia, a number of countries including the large economies of India and China have made improvements in the 21st century in terms of reducing poverty. Yet, 22% of the developing countries in Asia live on a dollar a day . The situation is bleaker in the South and Southeast Asia region where 38% leave on less than a dollar a day and over 48% of the population living below the regions individual country poverty line . Likewise, absolute poverty is on the rise in Africa - generally recognised as the world’s richest continent in terms of natural resources - despite a recorded decline in global poverty rates (Bhattacharyya: 2005).
In the article “Conditions of Trade,” Michael Baxandall explains that fifteenth-century Italian art is a “deposit” resulting from the commercial interaction between the artist and the purchaser, who he refers to as a client. These works, as such, are “fossils of economic life,” and money, and they play an important role in the history of art. In our current perception of the relationship between the artist and art, “painters paint what they think is best, and then look around for a buyer” . However in the past, especially during the Renaissance period, the customers determined the content and form of paintings, as it was them who commissioned the work before it was created. He states that the artists and clients were interconnected and a legal agreement was drawn up specifying subject matter, payment scheme and the quality and quantity of colors, which would influence the artist’s painting style. Baxandall not only looks at the explanation of the style of painting that reflects a society, but also engages in the visual skills and habits that develop out of daily life. The author examines the situations between the painter and client within the commercial, religious, perceptual, and social institutions, centrally focusing on markets, materials, visual practices, and the concept of the Renaissance period, which saw art as an institution. Baxandall notes that Renaissance paintings also relate to the clients’ motives through such ways as possession, self-commemoration, civic consciousness, and self-advertisement. The author considers works of a wide variety of artistic painters, for instance, Filippo Lippi, Fra Angelico, Stefano di Giovanni, Sandro Botticelli, Luca Signorelli, and numerous others. He defines and exemplifies fiftee...
Proponents of Fair Trade often overlook the costs of becoming and maintaining a Fair Trade certification. Thus, the analysis they give on its utility does not portray the entire picture accurately. Fair Trade includes several explicit and implicit costs to the producers (Haight 15). The most obvious costs come in the form of certification fees and costs of inspections. To attain membership in FLO, cooperatives must pay a fee. Furthermore, they must pay for inspections to verify that they meet the standards required by FLO. However, these are not the only costs. Many hidden costs exist for Fair Trade producers. The standards that FLO holds its producers to require
...ization.'; (Jackson p.440) Dependency theory actually suggests that LDCs should not follow the Western route to development. It also suggests that forcing the undeveloped countries to compete globally will only increase the gap between Third World countries and developed states. In other word, it increases poverty in those Third World countries. The existence of these Third World countries is only to provide cheap labors for the benefit of richer states. In the above case (Indonesia), government growed crops that are for sale on the world market for cheap prices rather than to provide food for the poor. This is a good example of benefiting the Western states while giving up the whole interest of domestic people.
Even in a world focused on the benefits free trade and aimed at achieving the goal of free trade, states are protectionist by nature. Unfortunately, the design of the international system allows for stronger nations to be more protectionist, leaving the weaker states even more vulnerable. A study that is more intensive than a critical commentary should be devoted to analyzing the impact of free trade on developing nations. I was limited to the readings and prior knowledge, and thus couldn’t provide a sufficient analysis on the fair treatment of developing nations. I was skeptical of the one reading that focused on fairness of international institutions because of the statistics that indicate these nations have not done well in recent decades. I would like to look into this more given more time and resources.
If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. Is this unfair competition? Opinions differ, but many governments take action against dumping in order to defend their domestic industries. The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-Dumping Agreement”.
Functionalism: The discord that interest in one reach, (for instance, trade) pushes coordinated effort in distinctive extents. In principle, the pills issue, movement issues, et cetera are all tended to fortnightly
What if there was a way to consume and use everyday products while knowing the people who put the hard work into growing and harvesting them are being treated as fairly as possible? Fortunately, there is a way for the consumer to have full confidence in this while purchasing their products. What the buyer should look out for is if the product is marked “Fair Trade” or not. Fair Trade is a type of business in which it is established that the producer is paid a fair price for the goods they provide. Whereas some producers get ripped off and paid only a small portion of what they should be, Fair Trade ensures that this does not happen and gives the producers the full benefit of their work. Some may ask, “is it really worth it to invest in something that will only put a label on a product?” The answer is yes. In this day and age, every humane person should have the decency to pay a little bit extra to warrant the fair treatment of the producers. Fair Trade is quite a simple social movement to operate with rules that can be easily enforced and the range of products is large yielding it to have its strengths and weaknesses, as does every operation of this scale.
“…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1”
In conclusion, Collier thoroughly explains his reasons behind why the bottom billion countries are poor. His arguments covered a variety of the course concepts like internationalism, failed state, Globalization, and economic forces. However, after critical evaluation, it is clear that Collier ignored and underestimated several of these concepts.