Mr Daniel Granditer
Measures to increase economic development and growth for LEDC’s
1.
Open up markets in the developed world so that LEDC’s can increase trade. This is especially relevant for the production of agricultural goods. Many LEDC’s have a comparative advantage in the production of agricultural goods. By specialising in agriculture they could increase exports to MEDC’s and achieve ‘export led growth’. This requires the EU to abolish the ‘common external tariff’ on agricultural exports and the US to abolish farm subsidies.
The effect of an increase in agricultural exports is shown by an increase in AS
If the export multiplier could be of a high value e.g. 4
Change in X × multiplier = change in y
$2bm x 4= $8bn
Example of tariffs against agricultural imports include tomatoes, snail, wheat, sugar, citrus fruits
Evaluation * Increasing trade may mean MEDCs do not have to offer so much foreign aid * LEDCs may be able to repay their debts to MEDCs * Increasing trade links mean a long lasting measure to create growth and development rather than relying in short term fixes such as debt reliefs and foreign aid * However, LEDCs may become even more dependent on ‘primary products’ amd reliant on exports to MEDCs
Typically, there are unfavourable terms of trade for agricultural goods
2. Diversification
LEDCs may seal to diversify their economies in older to reduce dependency on agricultural and other commodities.
Diversification may enable an LEDC to grow in a more steady and sustainable way. It also means the different sectors of the economy could grow in a balanced way, that us growth for the primary, secondary and the tertiary sector of the economy.
The advantage of diversification also include more value-added in production of goods and services, so increasing natural income and living standard.
E.g. oil reserves are running out tourism
An LEDC may gain by diversifying into tourism.
Advantages include: * Global tourism is a
1.
Open up markets in the developed world so that LEDC’s can increase trade. This is especially relevant for the production of agricultural goods. Many LEDC’s have a comparative advantage in the production of agricultural goods. By specialising in agriculture they could increase exports to MEDC’s and achieve ‘export led growth’. This requires the EU to abolish the ‘common external tariff’ on agricultural exports and the US to abolish farm subsidies.
The effect of an increase in agricultural exports is shown by an increase in AS
If the export multiplier could be of a high value e.g. 4
Change in X × multiplier = change in y
$2bm x 4= $8bn
Example of tariffs against agricultural imports include tomatoes, snail, wheat, sugar, citrus fruits
Evaluation * Increasing trade may mean MEDCs do not have to offer so much foreign aid * LEDCs may be able to repay their debts to MEDCs * Increasing trade links mean a long lasting measure to create growth and development rather than relying in short term fixes such as debt reliefs and foreign aid * However, LEDCs may become even more dependent on ‘primary products’ amd reliant on exports to MEDCs
Typically, there are unfavourable terms of trade for agricultural goods
2. Diversification
LEDCs may seal to diversify their economies in older to reduce dependency on agricultural and other commodities.
Diversification may enable an LEDC to grow in a more steady and sustainable way. It also means the different sectors of the economy could grow in a balanced way, that us growth for the primary, secondary and the tertiary sector of the economy.
The advantage of diversification also include more value-added in production of goods and services, so increasing natural income and living standard.
E.g. oil reserves are running out tourism
An LEDC may gain by diversifying into tourism.
Advantages include: * Global tourism is a