Development through International Trade

1. Development through International Trade By: AH-Kia Walker Meghan Rose

2. Rostow’s development model • Traditional Society- a country that has not yet started a process of development. • Preconditions for Takeoff-an elite group that initiates innovative economic activities. • The Takeoff- rapid growth is generated in a limited number of economic activities. • The Drive to Maturity- modern technology diffuses to a wider variety of industries. • Age of Mass Consumption- the economy shifts from the production of heavy industry to consumer goods.

3. Example of international trade approach • Saudi Arabia is the largest and most populous country in the Persian Gulf area. • Persian Gulf countries have used petroleum revenues to finance large scale projects. • The landscape has been further changed by the diffusion of consumer goods such as: large motor vehicles, color TVs, audio equipment, and motor cycles. • Some Islamic religious principles conflict with business practices in most developed countries, for example women are excluded from holding most jobs and visiting public places also business must halt several times a day for Muslims to pray.

4. The 4 Asian dragons • Among the 1st countries to adopt the international trade alternative were: South Korea, Singapore, Taiwan, and the then British colony of Hong Kong. • Singapore and Hong Kong have virtually no natural resources but compromise large cities surround by very small amount of rural land. • South Korea and Taiwan were influenced by Japan who occupied their countries until after WWII.

5. Problems with the International Trade Alternative. • Uneven resource distribution. Middle Eastern countries successfully developed through rising petroleum prices. Other countries found that their commodities didn’t increase, some decreased. • Market stagnation-countries that depend on selling low cost manufactured goods find that the world market for many products is expanding slower than in the past. MDC’s have limited growth and population consumer purchasing power and market size. To increase sales LDC’s may need to capture sales from established competitors rather than share and expanding markets • Increased Dependent on MDC’s- building up a handful of takeoff industries that sell to people in MDC’s may force LDC’s to cut back on production of necessities.

6. Recent Triumph of the International Trade Approach • World Wealth as doubled during the past quarter century. • India has dismantled its formidable collection of barriers to international trade. • Countries have converted from self-sufficiency to international trade for one simple reason: overwhelming evidence that international trade better promotes development

7. World Trade Organization • Countries negotiate reduction or elimination of international trade restrictions on manufactured goods. • Promotes international trade by enforcing agreements. • Has been sharply attacked by liberal and conservative critics. • Protesters usually gather in the streets outside level meetings of the WTO.