Problems Faced in Trading Goods and Services

PROBLEMS FACED BETWEEN
COUNTRIES IN TRADING
GOODS AND SERVICES
(IMPORT-EXPORT)

Startz, M. (2016). The value of face-to-face: Search and contracting problems in
Nigerian trade. Available at SSRN 3096685.
According to Startz, (2016), huge distance between buyers and sellers trigger
many contractual problems. It contradicts the fact that travelling is cheap, and easy, it is more
of observable strategy where travellers of developing country are exploited. It creates a
search problem that is related to hindrances in finding goods and services. It refers to
hazardous problem that deals with the difficulty of ensuring that actual payment has been
receive d or not. The author refers it as persistent empirical puzzle that implies that the trade
cost implies that flow of goods and services is consistently much higher than the observable
cost such as transportation and tariff costs. Without having, the clear information regarding
the underlying costs and other source of trade costs, it is important to figure out to design
appropriate market policies related to integrating them. In developing countries, the trade
costs is high and cost of information is also high due to weak contracts, enforcement
institutions, small firm size, and also limited access to information technology. This leads to
export of goods that operate under perfect competition market that are carried out through
perfect enforcement contracts. The author recognises the problems related to costing, tough
enforcements through contracts, high cost of trading, less knowledge, higher transportation
cost, and problem in integrating the source of trading costs. The author has highlighted the
problem of Nigeria which is an developing country and it heavily focus on raw materials,
shoes to heavy machinery and agriculture and all manufactured goods are being imported. It
imports clothing, cosmetics, light hardware, furniture, and other apparels as 17% of the
Nigeria people have started spending on apparels. Practically, the detailed above facts reveal
that understanding of market recessions in the trading sector in economically important.
Prebisch, R. (2016). Towards a new trade policy for development. ECLAC Thinking,
Selected Texts (1948-1998). Santiago: ECLAC, 2016. p. 211-238.

According to Prebisch, R. (2016), the main problems related to international
imports and exports is the real imbalances in economic system of the countries. In order to
understand the phenomenon that calls for theory or another set of theoretical tools as the
analysis go behind the mechanical application of category, especially when derived from
simple theories such as Stockholm school that considers to explain inflation in relation to
overinvestment or demand that exceeds the supply. Most preciously, it examines the
behaviour of several social classes and their bargaining power where the approach shows that
the inflation is general phenomenon suffers from these struggles. As per the statement of
author, several factors are to be considered such as population distribution by population,
structural factors, and productivity differences in various economic sectors. The author gives
the example of Latin American country that suffers from inflation issues because of dynamic
factors such as fluctuating growth rate as a whole including specific sectors such as
agriculture and exports. The author clearly lay down some institutional factors such as
number of productive organisations in the private sector, the notch of monopoly in the
national economy, extend to which trade union and their pricing methods force the
government in moulding its policies under the functioning of state. The author suggests
simple model that focuses on two main categories such as propagation mechanisms and
inflationary pressures. These pressures occur in local areas further creates imbalances that
overs the influence on agriculture and Foreign trade. A great variety of mechanism includes
social security and exchange rate system, credit mechanism, and the income and price
mechanism adjustments. The author explains this relation with the help of example of Chile
and Mexico. In these countries, the intensity of inflation rely on magnitude of inflationary
pressures and the role which they in the national economy. When the intensity is measures in
price hikes, chile will be winner.