The Role of Government Intervention in Developing Nations Economy

1825 Words4 Pages

All nations can get the benefits of free trade by being specialized in producing

goods they have a comparative advantage and then trade them with goods produced

by other nations. This is evidenced by comparative advantage theory.

Trade depends on many factors, country's history, institution, size and

geographical position and many more. Also the countries put trade barriers for the

exchange of their goods and services with other nations in order to protect their own

company from foreign competition, or to protect consumers from undesirable

products, or sometimes it may be inadvertent. And even though the tariff barriers have

been reduced significantly but the other barriers are still exist.

The developing nations have argued that the protectionist trading policies of

developed nations is being an obstacle against the industrialization of many

developing nations. Accordingly, developing nations have sought a new international

trading system with improved access to the market of developed nations. Some of the

problems that the developing nations faced have been unstable export markets,

Deterioration terms of trade, and limited access to the market of developed

nation.

Most of developing nations concentrate in one or few primary products in

their exports. When the market demand decreases for that product it will reduce

export revenues significantly and disrupt domestic income and employment

level.

Both developed and developing countries are benefited by tariff reduction.

The consumer will have more choices with more products and wider price range.

Tariff reduction allows comparative advantage to reveal itself by encouraging

resources to be used in a way that the country...

... middle of paper ...

...elp.org/blog/5735/economics/should-the-government-intervene-in-the-economy/

5- Should governments intervene more in developing countries?. (2013, March 14). Retrieved from http://www.cassforquestions.com/2013/03/should-governments-intervene-more-in.html

6- Salem, M. (2012, August 20). Free trade barriers: Weapons used against undeveloped and poor nations. Retrieved from http://www.buddhasemptyplace.com/2012/08/20/free-trade-barriers-weapons-used-against-undeveloped-and-poor-nations/

7- Fakharuddin, S. M., & Ahmed, M. (2009, August). Export promotion & import substitution. Retrieved from http://fakharb.blogspot.com/2012/04/export-promotion-or-import-substitution.html

8- Bura, R. (n.d.). How export-led growth is used as a development strategy?. Retrieved from http://www.preservearticles.com/2012042631258/how-export-led-growth-is-used-as-a-development-strategy.html

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