On Trade

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Free trade between industrially advanced countries can be of mutual benefit. However, free trade between rich and poor countries is usually detrimental for the less developed trade partner. The dominant position of the more developed trading partner usually results in trade agreements which enrich the wealthier country at the expense of the poorer one..

Prout suggests that countries attempting to build their industrial capacity should protect their infant industries through tariffs and import restrictions. Once industries have been developed sufficiently enough to compete, they can gradually be exposed to trade through local trading blocks that can expand geographically over time. In order to maximize their income, it is best if developing nations only export finished or semi-finished goods and not just raw materials. For example, by exporting clothing rather than cotton, more people are employed in the production and there is greater profit when the goods are sold, stimulating the local economy.

However, in the situation where a country has vast resources of raw materials, such as oil, then export may be mutually beneficial as the exporting country will benefit from trading its surplus raw material and the importing country will be able to obtain a much needed resource which it lacks. According to Prout, oil-exporting countries need to use the profits from such trade to diversify their own local industries.. Barter of raw materials can be a great way for developing nations who lack currency for trade to ensure sufficiency in food and other basic needs. In general, the main strategy here is for both developing and developed nations to first build a self-sufficient industrial and agricultural economy as far as possible before engaging in large scale trade. In this way, they will be trading on more level playing field which will benefit all parties involved.

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