What are the advantages and disadvantages for a developing economy, such as Ghana if it is dependent on primary products? Definition of Primary products: Raw materials and resources used in the productive process. Examples include metals, agricultural products and minerals. Advantages of Producing Primary Products For many developing economies, their main comparative advantage will be …
Readers question: What is a ‘dual economy’? A dual economy refers to the existence of two distinct types of economic segments within an economy. This involves: A capitalist based manufacturing sector (geared towards global markets) Labour intensive agricultural sector (low productivity, geared towards subsistence farming or local markets) The British economist W. Arthur Lewis wrote …
Readers Question: Could you differentiate between micro economics and macro economics? Microeconomics is the study of particular markets, and segments of the economy. It looks at issues such as consumer behaviour, individual labour markets, and the theory of firms. Macro economics is the study of the whole economy. It looks at ‘aggregate’ variables, such as …
Primary products are goods that are available from cultivating raw materials without a manufacturing process. Significant primary product industries include agriculture, fishing, mining, and forestry. Examples of Primary products oil water fish fruit crops wood Often developing countries have a comparative advantage in producing primary products. This is because many developing countries (e.g. in Africa …
Many economists support free trade. However, in some circumstances, there are arguments in favour of trade restrictions. These include when developing economies need to develop infant industries and develop their economy. Reasons for blocking free trade Infant industry argument If developing countries have industries that are relatively new, then at the moment these industries would …
Definition of trade creation Trade creation refers to the increase in economic welfare from joining a free trade area, such as a customs union. Trade creation will occur when there is a reduction in tariff barriers, leading to lower prices. This switch to lower cost producers will lead to an increase in consumer surplus and …
An examination of the advantages and disadvantages of congestion charges: Some cities, such as London have introduced a congestion charge. The aim of a congestion charge is: Reduce congestion. Therefore reduce time wasted and reduce costs for business Reduce pollution. Fewer cars will lead to less pollution. Make city centres more attractive for pedestrians and …
Agriculture often appears to be one of the most difficult industries, frequently leading to some form of market failure. In the EU and US, agriculture is the most heavily subsidised industry, yet despite the cost of the subsidy it fails to address many issues relating to agriculture. Types of market failure in agriculture Volatile Prices …