Economics: Impact of Trade on Least Developed Countries and Barriers

This assignment examines the impact of international trade on least developed countries (LDCs). It argues against the assumption that free trade is not beneficial, highlighting the significance of natural resources and the necessity of imports for LDCs. The assignment discusses how trade barriers can increase the cost of essential imports such as medical equipment. It also addresses concerns about the impact on domestic businesses, suggesting that LDCs' low purchasing power and lack of cost competitiveness often mitigate this issue. The assignment further suggests that protectionist measures and import substitution strategies are ineffective in the long run, hindering the transfer of knowledge, capital, and technology from developed countries. The conclusion emphasizes the benefits of competition from imports in ensuring lower prices and greater efficiency. The assignment references works by Janvry & Sadoulet (2016) and Roland (2015).

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It would be incorrect to assume that free trade would not be beneficial for least developed
countries. This is primarily because a host of least developed countries have significant
natural resources which have a sizable contribution to exports. This applies to a majority of
least developed countries in Africa as well as Latin America. Additionally, owing to low
level of development, a host of critical requirements such as medical equipment, medicines,
capital tools and other items are met through imports from the developed and developing
nations. Erecting trade barrier would make these critical imports even more expensive
(Roland, 2015).
A particular concern related to open trade is that domestic businesses may be impacted owing
to import of foreign products. With regards to least developed countries, this is rarely the case
as the products from more developing countries rarely find any robust market owing to poor
purchasing power and also lack of cost competitiveness. Besides, for the protection of
selective local industries, protectionist measures can be undertaken. However, these in the
long run lead to inefficiencies owing to which the consumers end up paying high prices
(Janvry & Sadoulet, 2015). As a result, competition from imports is preferred as it would
ensure cheapest price for the consumers along with higher efficiency for producers. Erecting
trade barriers and adhering to import substitution in the long run is an unsuccessful strategy
as it breeds inefficiency and stops transfer of key resources from developed world such as
knowledge, capital and technology (Roland, 2015).

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References
Janvry, A.D. & Sadoulet, E. (2016) Development Economics. Theory and Practice, New
York: Routledge
Roland, G. (2015) Development Economics, New York: Routledge