How The Pattern Of World Trade Creates Problems For LEDCs

Question 1

What do world trade patterns do in LEDCs?

Answer 1

World trade patterns hinder economic growth in LEDCs.

Question 2

Describe how control of world trade has created problems for LEDCs.

Answer 2

MEDCs currently control 80% of world trade. LEDCs are losing control of world trade and currently control approximately 20%. These countries earn less profit from trade and can’t develop as fast.

Question 3

Explain how exports and imports have created problems for LEDCs.

Answer 3

MEDCs export more than they import, meaning they have trade surplus.
However, LEDCs import more than they export, which leads to trade deficit. They spend more money on imports than they make on exports, which leads to a loss.

Question 4

Explain how trading blocs cause problems for LEDCs.

Answer 4

Countries join unions which act as trading blocs such as the EU.
These countries only trade amongst themselves and not with LEDCs. LEDCs are typically not members of these trading blocs.
Therefore they lose out on trade which would otherwise earn them profits.

Question 5

Explain how the exportation of particular kinds of goods creates problems for LEDCs.

Answer 5

MEDCs export secondary goods, such as machinery, which are high in price.
LEDCs export primary, unprocessed products or raw materials, which are low in price. They don’t profit as much and due to trade deficit many LEDCs end up with a loss.

Question 6

Explain how tariffs create problems for LEDCs.

Answer 6

MEDCs place tariffs on imports to protect workers’ jobs.
This costs LEDCs approximately $700 billion US each year.
50 LEDCs depend on just 3 products for more than half of their exports.
These are often sold at low and fluctuating prices, so there is no security.
Ultimately, this leads to trade deficit.

Question 7

Explain how the selling of goods to MEDCs creates problems for LEDCs.

Answer 7

LEDCs often grow cash crops, such as cotton, and sell them to MEDCs to lower debt.
However, this reduces the amount of agricultural land available to grow food and diminish hunger.

Question 8

What do MEDCs depend on LEDCs for?

Answer 8

1. Food
2. Raw materials
3. Cheap labour

Question 9

What do LEDCs depend on MEDCs for?

Answer 9

1. Investment
2. Expertise
3. Markets