Problems of Developing Countries in International Trade

Problems of Developing Countries in International Trade Developing countries and trade Introduction: International trade is an important source of foreign income in almost all developing economies, these countries are referred to as developing due to their low GDP level and they are faced with high levels of poverty and unemployment, according to David Ricardo and Adam smith international trade plays a crucial role in the development of an economy, the Mercantile theory of development states that trade led to the wealth of nation. This paper discus the various problems that the developing countries face in international trade and their effect on the agricultural, industrial and service sectors. Some of these problems are external†¦show more content†¦Technology and mechanization: Developing countries import technology and machinery from the developed countries, these machines help in increasing production and also bringing down the cost of production, however due to the high cost of these machines the developed countries prefer to use labor intensive methods of production due to high initial cost and also maintenance costs. The lack to use modern machines and technology in production lead to low levels of exports and also high costs of production, for this reason therefore the developed countries remain with the problem of underproduction and also low exports. The lack of machines that help in turning the raw materials from the agricultural sectors into finished products lead to increased disadvantages to the developing countries, most developing countries export raw materials whose prices in the international market is low, developing countries should therefore start exporting finished products from the agricultural sector rather than export raw material. Some developing countries use genetically modified plants for production, these products are more productive where the time taken to grow and also the production levels. 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