Question #1: Briefly explain why some economists regard traditional trade theory
ID: 1119782 • Letter: Q
Question
Question #1: Briefly explain why some economists regard traditional trade theory as irrelevant for developing nations and the development process? a. b. How can the charge in part (a ) be answered? Question #2: a. In what way was international trade an engine of growth for certain regions during the nineteenth century? Why can international trade not be expected to be an engine of growth for today's developing nations? b. Indicate one way in which international trade can still play a very important supportive role for development today? c.Explanation / Answer
Q1 a) Some economists regard traditional trade theory as irrelevant for developing nations and the development process. this is because in traditional trade theory there was exploitation of developing countries which was taking place. Developing countries were only major exporters of primary products and raw materials that too at certain terms and conditions. So the growth of developing countries was not taking place. Instead there was drain of wealth from developing countries to developed countries in the name of trade.
b) The charge in part (a ) can be answered on the basis of expoitation of developing countries by developed countries via import of primary and raw materials and export of finished goods at higher price.
Q2 (a) International trade was an engine of growth for certain region during nineteenth century because it started railways and other means of transport which became an engine of growth in the future. It also initiated some small handicrafts and artisans industry in certain regions which became new source of earning for the people.
(b) Internnational trade cannot be expected for today 's developing nations because deloping nations are poor and they have less resouces for capital formation. They are less advanced in technology and hence they are not competitive. So it is not beneficial for developing countries to trade with developed countries.
(c) International trade can still play an important role for development today by technology transfer to devepoing countries and giving foreign aid to devloping counties for building basic infrastructure. So that economic growth can take place in cdeveloping countries.