International Economic System

Speaking of US and Western power in the international economic system, their goals and methods of so call helping the LEDCs is a lie. What we see today is that poor countries stay poor and the rich countries stays rich. Let’s talk about why these poor countries are poor originally. Internally, the lack of natural resources is one part of the reason, with the lack of natural resources, the countries itself cannot produce it’s own power sources and they are not able to use the natural resources to benefit themselves. Probably the other reasons is poor governance, with poor governance, the citizens will not be able to cooperate with the government. Sometimes the governments focus on benefit him or her instead of the citizens of countries. Talking about natural resources, the geographic disadvantage is one part of important fact, the disadvantage, they may not be able to produce it’s own food and it leads to starvation within the countries. The lack of infrastructures leads to inconvenient within the countries. Sometimes it includes school and other important infrastructures.

        The MEDCs believes that free trade can help the LEDCs to develop. They MEDCs will import in higher tariff, so they would sell clothes in higher prices. The LEDCs citizens will then buy the products that are made in there countries. Speaking of advantages on products, MEDCs has technology and infrastructures that will decrease the cost for making their products and they can produce in large amount. They can sell their product cheaply in the LEDCs. LEDCs citizens will buy the products that are cheap to them, but LEDCs manufacture factory do not have technology to produce in a cheap price. If they lower their prices, the workers will not get enough amount of money to live.

        This leads to loans, if a LEDCs want to borrow money for building infrastructures and build technology in their factories. They will have to borrow the money from World Bank, but the World Bank was control by the MEDCs, if they borrow it, they are force to follow certain rules such as lowering the tariffs. This will make the MEDCs product even cheaper and the LEDCs have the money but it is not able to sell more products. Then the World Bank will ask them to pay their debts or start paying the interest. The LEDCs might took the money that is originally use for building infrastructures to pay those debt but if that is not enough, they will have to borrow more money from other countries. It turns into a cycle and the LEDCs will be more and more in debt.

        Another real example is that in America, some states are able to produce large amount of corns that the Americans cannot even finish, which is why food in America is so cheap. The rest of the food will be sold in other countries in cheaper prices. This will hurt the farmers in those countries. The reason why American famers are able to profit from growing food is because the America pays more money to the famers to continue their business. The US famers will profit even more than what it is suppose to get. That is why the LEDCs are continuing being poor and as they aren’t developed, their population will start increasing.