Free Essay: Challenges Facing Developing Countries in International Trade
International trade is a main foreign income earner for most of the developing countries around the world. In fact, almost all developing countries depend on international trade in order to boost their economic standards. The products that most developing countries trade in mainly include agricultural products, minerals and tourism. However, there are quite a number of challenges that these countries are faced with in the event of conducting trade on the international platform. When looking at these challenges, it is very important to note that some are external while others are internally inflicted. Read on to find out more.
One of the greatest challenges that are faced by developing countries when it comes to international trade is trade barriers. The most common types of trade barriers that hamper efficient and profitable trading activities of developing nations on the international platform include tariffs, quotas and non-tariff barriers. In most occasions, it occurs that developed countries impose high tariffs on developing countries which lead to very unpleasant results. High tariffs mean that imports are charged highly and this also spills over to the consumers who will be required to pay more in order to acquire the products.
Human capital is yet another problem that is faced by developing countries in international trade. For successful trade to be conducted, the number of people, their training and experience is of great value. However, these are some of the resources that most developing countries do not have. Thus, they end up serving as laborers in the industries of the developed countries. Since there is lack of expertise in most of the sectors, it becomes a major challenge for developing countries to create products that are competitive on the international market. Developing countries lack skilled labor force that can come up with products to match up those of the developed countries on the international market, thus, they end up playing the slaves.
Apart from just the human capital, developing countries also lack adequate resources that can be used in generating the best produce that can do better in the international market. For instance, farmers in developing countries lack incentives that they can use in generating better farm produce that can be obtained at the best prices on the international markets. As a result of this, most of the agricultural produce from a number of developing countries end up being used just locally where prices are very poor. However, the low quality agricultural products produced in developing countries can also be attributed to poor weather and environmental conditions.
Cultural barriers are also a challenge that is faced by developing countries in international trade. Traditions and habitual ways of conducting business vary among societies and not all are generally accepted across the board. Cultural forces are a greater source of inefficiency in developing countries, whereby you find that past relationships, favors among other petty issues are given precedence over trade. For instance, you may find that some developing countries are reluctant to trade with certain nations because the two have had strained relationships in the past.
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