DEVELOPING COUNTRY TRADE

Developing Country Trade



Developing Country Trade: Zambia

Liberalization of Trade

In order to improve the standard of living, ensuring full employment, real income and effective to ensure that the demand of the huge, sustained growth, the expansion of world resources and the development of the full use of production and exchange of goods, the WTO established a series of basic principles. Of this trade, liberalization is an extremely valuable principle, but also a fundamental principle. The so-called principle of trade liberalization, in essence, is to restrict and hinder and prevent the abolition of all international trade be carried out with all the obstacles, including laws, regulations, policies and measures (Collier and Dollar, 2004). Trade liberalization needs to be two factors: First, elimination of quantitative restrictions, the second is to reduce tariff barriers in the name of duty. Both for the country's economy and the whole world, trade liberalization is becoming more attractive.

Terms of Trade

The terms of trade are exchange relations in trade between countries. They are determined by changes in the pricing structure of exports and imports. Most of them are established through the comparison of price indices of the exportation and imports. Changes in prices of different goods or groups of goods are given through the supply and demand in international markets and can be explained by the price elasticity and income of the assets. If the terms of trade deteriorate for a country, it must increase the amount of exports in order to maintain the same level of imports. In other cases, it becomes a chronic deterioration of the balance of payments.

If its value is less than 1 means that the price increase by 1% led to an increase in demand of more than 1%, and hence demand imports is elastic. If the ratio is greater than 1, then the demand for imports grew by less than 1%, then imports are inelastic. Therefore, improving terms of trade, forcing the country to increase spending on imports if the demand is elastic, and reduce - if inelastic, increasing with the cost of exports (Peloso, 2005). The higher the elasticity of imports, the more developed market mechanism, which allows manufacturers to promptly respond to, changes in world prices. Low elasticity of a country fraught with serious economic problems if it is not due to other causes: the high investment made in the industry previously, the inability to quickly reorient themselves and others.

Official Development Assistance

The Official Development Assistance means any public expenditure that is for a developing country, which promotes economic development and improving living conditions in the country and mainly takes the form of grants and subsidized loans. It can take several channels: bilateral aid (direct aid from one country to another) and using European implementation within the European Union and multilateral assistance (implemented by organizations and international programs).

Fair Trade

Fair Trade is an exchange relationship based on dialogue, transparency and respect that seeks greater equity in international trade. Fair Trade contributes to sustainable development by offering better trading conditions, securing the ...