Published On: Sat, Jul 6th, 2019

Why Does the Developing World Struggle to Access the Market?

Market forces have historically been and continue to be regulated by Western born and led institutions, putting Western economic and trade interests at the forefront. Meanwhile, a significant number of trade policies and associated practices contribute to adversely affect the developing world while protecting and supporting the interests and prosperity of the developed countries.

The ‘Free Trade’ or ‘Free Market’ Disillusion

Despite being called ‘free trade’ or ‘free market’, the current system does not bear the basic characteristics of freedom, making its appellation superficial and misleading. A series of policies and regulations serves to control the ways in which trade is taking place between different countries, and as Joseph Stiglitz and Andrew Charlton remarked in their 2005 book, “Free Trade for All: How Trade Can Promote Development”, “almost every country imposes some trade restrictions and taxes”. In fact, most developed countries manipulate the market to suit their own needs and advantages regardless of the impact the latter might have on the developing world.

Policy versus Practice Contradictions

Some of the developed countries which have been the strongest advocates of trade liberalisation and of the reduction of tariffs on trade, have acted in quite a contradictory manner. Again as Stiglitz and Charlton put it, while “they have negotiated the reduction of tariffs and the elimination of subsidies for the goods in which they have a comparative advantage”, they have been “more reluctant to open up their own markets and to eliminate their own subsidies for the goods in which they have a comparative” disadvantage, or else, in “other areas where the developing countries have an advantage”.

A perfect example of the latter is the agricultural sector which constitutes a small fraction of Western economy while it represents a large percentage of many developing countries’ Gross Domestic Product (GDP). The substantial subsidies given to the agricultural sector in the West followed by intense production, have hampered the developing countries’ ability to sell their products competitively on international markets.

Another example of market restrictions used extensively by the West to control the market to their advantage is the use of Quota. The latter poses restrictions to the quantity of a product which can be exported from one country to another. The West has been using quotas on textile exports from developing countries, knowing that the latter have a comparative advantage in this sector. However, they have not been using such measures between themselves, countries of the North. This may lead some of us to conclude that there is a real eco-political discrimination towards the developing world, which is kept from competing fairly internationally.

Developing World, Market

Regionalisation

All this has led the developed countries to expand and increasingly compete between themselves, rarely including the developing nations but for their need in raw materials, which have obviously become, in an era of high technological advances, highly devalued, as has the price of primary commodities. As a result, regionalisation has intensified with time in the history of political economy and market activity is concentrated between certain regions. Bruno Amoro, in his 2007 journal article “Globalization and Poverty: Winners and Losers”, identifies three main regions of intense market activity, America, the European Union and the Asian Pacific region. The rest of the world is left aside from this “triangle of wealth, power and technology” says Amoro.

Sadly, accessing the market is essential in this era of globalization and although developing countries may need to better control how they do so in order for it to be profitable, the policies of the rich countries need to change too. Mark Beeston and Iyanatul Islam mention in their 2005 Journal article “Neo-liberalism and East Asia: Resisting the Washington Consensus”, that between other things, the rich countries need to “create a necessary demand for developing countries’ exports” as well as commit to pay fair prices for the latter.

About the Author

- Paul Linus is an eminent online journalist who has been writing news, features and editorials on different websites from across the world for about a decade. He can be contacted at knowledgeherald@gmail.com

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