DO DEVELOPING COUNTRIDS NEED

TRADE OR AID

GROUP7

TRADE OR AID ? 2

CONTENT

What is a Developing Country ?

What is Trade ?

What is Aid ?

Conclusion .

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A country with a relatively low standard of living, undeveloped industrial base, and moderate to low Human Development Index (HDI). 

Also called as Third World country.E.g. Sri Lanka, Cuba, Nepal, India, Brazil .

What is a Developing Country ?

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Countries with less than

$1,035 GNI per capita are classified as low income countries

Countries with between

$1,036 and $4,085 as lower

middle income countries Based on Data 2012

Developing Countries

According to the “WORLD BANK”

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1. Law standard of living.2. High Dependence on Agriculture.3. Under utilization of natural Resources.4. Lack of Capital and Technology.5. Lack of Basic Infrastructures.6. Depends on primary exports.7. Demographic Characteristics8. Dualistic Economy.

Main characteristics of developing countries

TRADE OR AID ? 6Source: World Economic Situation and Prospects 2014

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“Activity or process of Buying ,Selling or exchanging Goods or Services ”.

Trade is essential for satisfaction of human wants. Not only for the sake of earning profit; it also

provides service to the consumers. It enhances the standard of living of customers. Trade is a key factor influencing prospects for

sustainable and equitable growth among developing countries .

TRADE

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Types of TradeTRADE

INTERNAL

Wholesale

TradeRetailTrade

EXTERNAL

Import Export Entrepot

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EXTERNAL TRADE…

deals with the exchange and distribution of goods and services made for local consumption

INTERNAL TRADE…

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Wholesale Trade : Buying in large quantities from producers or manufacturers and selling in lots to retailers for resale to consumers.

Retail Trade : Buying in smaller lots from the wholesalers and selling in very small quantities to the consumers for personal use.

Export Trade : When a trader from home country sells his goods to a trader located in another country, it is called export trade.

Import Trade : When a trader in home country obtains or purchase goods from a trader located in another country, it is called import trade.

Entrepot Trade : When goods are imported from one country and then re-exported after doing some processing, it is called entrepot trade.

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I. Accelerate Economic Growth.II. Facilitates export diversification.III. Enhances competitiveness.IV. Expands Business opportunities.V. Creates employment opportunities.VI. Encourages innovations.VII. Benefits to Consumers.VIII. support to own country and pay taxes to help own country. IX. Products are often better quality and last longer in own

country. X. If a product is made domestically, it doesn't have to be

shipped as far, saving money on shipping.

ADVANTAGES

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I. Long Term Process and Blow to Infant Industry.

II. Diversification of Savings.III. Over Interdependence.IV.Diversification of Savings.V.  Declining Domestic Employment.VI.Additional Licensing And Other

Taxes, Regulations.VII.Exhaustion of Resources.VIII.Dumping.

Disadvantages of International Trade

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Foreign Aid mean Economic , technical , military aid given by one nation to another purpose of relief and rehabilitation for Economic stabilization or for mutual Defense.

Aid may be given by individuals, private organizations, or governments.

The general aim of foreign aid is to provide in each Developing Country a positive incentive for maximum national effort to increase its rate of growth.

AID

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Bilateral aid Multilateral aid Tied aid United aid Food aid

Technical Assistance Grants

Soft loan Hard loan

Project Aid/Assistance loan

Direct foreign investment

TYPES OF AID

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Increase in Tax Revenue. To Solve the Problem Of Balance of payment. To raise the standard of living. Defense Modernization. Meeting Emergencies. Level of Technological Increases. Establishment of Modern Economic and

Social Infrastructure.

ADVANTAGES OF FOREIGN AID

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1. Increase in Foreign Aid's Debt servicing.2. Increase in Production Cost.3. Habit of Dependence on Foreign Loan and

Misuse of Aid.4. Do not pay attention for development of

technology.5. Exploitation by Donor Countries.6. Commodity Aid Discourages Domestic

Agriculture Output7. Foreign Aid Does Not Improve Earning

Capacity.

DISADVANTAGES OF AID

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“ Developing countries need Trade, not Aid.”REASONS : TRADE is better because that makes a country realize and explore its own

potential. Only trade can enhance the economic growth of the country and it also

develops a better understanding between the nation. Aid is a short term desire while trade is the long term desire. Developing trade boosts the confidence and pride of people with in the

country. It develops more entrepreneurs and generates opportunities for job seekers. 

Finally trade helps enhancing the productivity and in turn the growth of the nation.

CONCLUTION

TRADE OR AID ? 18THANK YOU !