Share
Explore BrainMass

Developing countries and trade

Developing countries often claim that growth and trade have left them no better off or perhaps worse off. How might you explain this result theoretically? Could this result obtain if the countries tended to be relatively small?

Solution Preview

A number of things might be happening.

1. If a country was able to have their own companies and farming they had a working economy. Trade might have wiped out any local industries and made local produce uncompetitive. A country with only consumers will be worse off because all those consumers will eventually be out of a job, which would mean that they would no longer be able to consume. True, foreign companies can then come in and hire them at low wages but it isn't clear that the standard of living would be the same as before and ...

Solution Summary

Developing countries often claim that growth and trade have left them no better off or perhaps worse off. How might you explain this result theoretically? Could this result obtain if the countries tended to be relatively small?

$2.19