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Trade Policies and Issues of Developing to Developed Nations

From your knowledge on the trade issues of developing countries and the problems developing countries have relative to international trade, define and discuss at least two significant differences between developing countries and transition countries in terms of trade issues and trade problems relative to international trade. Be specific in your explanation, and use examples whenever possible to support your answer.

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Countries just starting on the path of development generally have very little local industry. Their economies generally rely on agriculture and mining. These countries must import most everything manufactured. So, they have generally low tariffs, keeping some level of tariffs as a source of income to the central government (the early US government relied almost entirely on tariffs to fund itself). They pay for them by exporting minerals, lumber, agricultural products, etc. Since these countries export commodities, there are world market prices that are out of control of the exporting countries. So, they do not really care too much about tariffs in their market countries. Countries like Burma, Laos and Cambodia are in this category. They mainly export timber and some minerals.

Due to their undeveloped agriculture with very little mechanization, this category is basically subsistence farming only, that is basically only enough to feed themselves. Also, these countries prefer to have strong currencies ...

Solution Summary

The author discusses the changes in trade and currency policies as nations move through the spectrum of development status.