trade

Question 1

what is the importance of trade?

Answer 1

• Trade between rich and poor countries is key to understanding development.
• Citizens of rich countries have only recently started showing interest in trade issues.
• Since 1950, international trade has replaced internal supply of goods at an ever increasing rate (Coyle, 2001).
• As dependency theory predicts, most trade is controlled by and benefits rich countries. They take control of trade routes and the “means of trade”.

Question 2

describe the Burundi case study

Answer 2

• 70% of the country’s national income is from caffeine production.
• This means that their main product isn;t something they need to survive, leaving them at the mercy of trade.
• The process of trade (the “supply chain”) syphons off the coffee’s value, leaving Burundi with a very small cut.
• The higher up the supply chain you are the more power you have over those further down in the chain. (Seller’s like big supermarket chains arguably have the biggest impact on those below them in the chain).

Question 3

what is global trade risks?

Answer 3

• Supply and Demand changes prices, making income unpredictable.
• Competition drives prices down, if you’re successful then what’s to stop someone else competing?
• Politics and fashion in rich countries often rely on products that are vulnerable to natural disasters, and producers usually have no insurance.

Question 4

describe cocoa farming in ghana

Answer 4

• Ghana once produced a third of the world’s cocoa. In the 1970’s the world cocoa price fell meaning people could not earn enough. The ghanain government also relied on tax revenues from cocoa experts and found itself in economic difficulty. It accepted a structural adjustment programme but this included cutting subsidies to cocoa farmers, increasing their difficulties. At the same time companies in the west were reducing the cocoa content in their chocolate which further decreased the demand.