Developing countries and their dependence on export
- Preliminary Features
- The human toll
- Political risk
- The real economy: Economics and Debt
- Economic Policy
- The external accounts and debt
In November 2009, the Venezuelan Minister for Economy, Ali Rodriguez acknowledged that his country was entering a recession, and that there had been a decline in GDP that year. He said that the slowdown that year could reach 2.2%. He also said that they could limit it to 1% with their efforts. Their growth goal had not been achieved that year.
The reason for their entry into recession, as given by the Minister, was declining oil prices. Since oil export is at the base of the Venezuelan economy, this has been a major factor that has led to the drop in GDP. Venezuela has an economy that seems favorable for international trade, as it is one among the top ten producers of crude oil. With the growing world, comes the growing need for energy. Venezuela is and will remain one of the major energy suppliers in the world. If we consider development as a process, then, Venezuela is a developing country. In the same context, Singapore and South Korea can be classified as developed countries. In contrast, Argentina was considered a developed country, until it was rocked by crises, between 1998 and 2002. Russia is also a developing nation and has entered the emerging market. Its development is mainly due to the export of oil and gas. Thus, we can see that most of the developing nations are dependent on export in order to sustain their development. The export commodities are dependent on world prices.
Hence, any change in the price of exports can bring about a major change in the economy of these nations. This is a vulnerable factor, which can lead to instability. This dependence may bring about strong growth in case of global expansion, and may wipe out a nation's economy, in case of a crisis. This, in turn, hits the development of these nations. So, is the dependence of developing countries on exports a hindrance to their future development?
Since the 90s, developing countries have been increasingly integrated into world trade, they are open to the outside and have expanded their exports, thereby gaining market share in world trade. In developing economies, exports increased from 29% in 2000 and 39% in 2007, so there is a real acceleration. As seen, exports are clearly at the heart of these economies.
During the same period, their share in world exports rose from 20% to 39% (even if China accounts for half that number)
Indeed, emerging markets including BRIC economies are integrated into international trade by referring heavily on exports. This type of economy has seen a strong growth in recent years, as much as higher than two points that are observed in developed countries.
This growth is even more important than exports of natural resources are often low-value, gold has been observed globally driven by price increases of basic products since 2002.
? Failed introverted strategies
The strategies consist of the introverted attempt by the state to create a local industry whose products are intended to replace imported goods. It's industrialization by import substitution, and the state has a central role. It can also be a Soviet-inspired model with a State planning requirements of the economy, developing heavy industry, the protections vis-à-vis the outside world. These strategies, set up in Algeria, India and Brazil, have led to inconclusive results and often turn to the acceptance of openness and export development.
Tags: BRIC economies, world trade, global expansion