Exam 7: Trade Policies for the Developing Nations

Stabilizing commodity prices around long-term trends tends to benefit $\underline { \text { exporters } }$ at the expense of importers in markets characterized by:

What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies?

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products, semi-manufacturers, and manufacturers?

To help developing nations strengthen their international competitiveness, many industrial nations have granted nonreciprocal tariff reductions to developing nations under the:

Once a cartel establishes its profit-maximizing price:

Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?

A $\underline { \text { primary } }$ goal of international commodity agreements has been the:

The United Nation Conference on Trade and Development in 1964 was successful in convincing developing countries to switch from export-led industrialization to import-substitution industrialization.

If the bauxite exporting countries form a cartel to $\underline { \text { boost } }$ the price of bauxite so as to $\underline { \text { increase } }$ sales revenue, they believe that the demand for bauxite:

The purpose of a cartel is to support prices higher than would occur under more competitive conditions, thus increasing the profits of cartel members.

By the 1990s, China had departed from a capitalistic economy and shifted to a Soviet-type economy encompassing small-scale, labor-intensive industry.

Among the economic problems facing developing countries have been low dependence on primary-product exports, unstable export markets, and worsening terms of trade.

Figure 7.3. World Oil Market -Consider Figure 7.3. Under a profit-maximizing cartel, the price of a barrel of oil equals:

Developing nations overwhelmingly acknowledge that they have benefited from international trade according to the principle of comparative advantage.

Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial nations.

During the late 1980s and early 1990s, China dismantled much of its centrally-planned economy and permitted free enterprise to replace it.

Figure 7.3. World Oil Market -Consider Figure 7.3. Under a profit-maximizing cartel, producers realize:

Prolonged defense of a price ceiling tends to increase the supply of a commodity held by a buffer stock manager, thus putting downward pressure on price.

Which of the following could partially explain why the terms of trade of developing countries might $\underline { \text { deteriorate } }$ over time?

The diagram below illustrates the international tin market. Assume that producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.1. Defending the Target Price in Face of Changing Demand Conditions -Consider Figure 7.1. Suppose the demand for tin decreases from D₀ to D₂. Under a buffer stock system, the buffer-stock manager could maintain the target price by: