Discuss five causes of unfavourable balance of payment for most developing countries

      

Discuss five causes of unfavourable balance of payment for most developing countries

  

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Davis
i) (reliance on) primary products /raw materials /agricultural produce for export /most developing
countries (mainly) export primary / agricultural products which fetch low prices in the international
market /lower their export receipts
(ii) Heavy /high importation of finished) goods /most developing countries heavily /highly import (finished
manufactured) goods whose values are very high /spend more on them
(iii) (low levels of technology most developing countries rely on low levels of technology on production
which) lower /poor quality of their export hence lowering their value /demand /receipts
(iv) (too much reliance on) foreign borrowing /aid /borrowing yet such loans are repaid with interest (v) (susceptility to ) /natural calamities /many developing countries are easily affected by natural disasters
/drought which adversely affect their production
(vi)high demand /preference towards foreign goods /imports most consumers in developing countries (in
belief that they are of better quality) hence end up spending more on them
(vii) unfavourable world economic order/policies /low bargaining power /the developing countries have very
little say in international trade forums / cannot influence the world economic order in their favour hence
end earning less on exports /spending more on imports
(viii) low /poor foreign investment in the country /inability to attract foreign investment leading to low
capital inflows /low foreign recepts
(ix) decrease in demand for exports hence lowering the countries earning
(x) low production /output of export goods /services /low volume of exports leading to lower export earnings
(xi) devaluation /depreciation of foreign currencies which encourages less export earnings
(xii) appreciation /revaluation of local currency which leads to lower export earnings
(xiii) political instability/insecurity which may interfere /lower export earnings
(xiv) restrictive/protectionism policies by other country that lead to fewer / exports earnings
(xv) withdrawal of foreign aid /grants leading to capital flight /outflows
(xvi) poor governance /policies /corrupt practices leading to low export earnings /low capital outflows
(xvii) unfavourable terms of trade leading to low export earnings /high expenditure on imports
Githiari answered the question on September 23, 2017 at 10:16


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