International Trade Theory

1687 Words7 Pages
Introduction In global economy Africa remains marginalized and under-developed economies face serious challenges in obtaining sustainable and diversified development through strategies that focus on foreign and domestic market. Trade is viewed by many as being important for poverty reduction in developing countries and international trade assist in sustained economic growth, contribute to the development of capacities and support the expansion of employment opportunities. In this essay Zambia will be used as a case study to explain how theories of International trade influenced policy in Africa and what the implications on African development are. The first part of the essay will cover the Background on Theories of International trade looking…show more content…
Ricardo identified two additional sources of growth in addition to capital and these being technical innovation and international trade. Ricardo believed that due to increased population, more land would be required to produce food and thus less would be available for industry and wage and return on investment for industrialists. In Ricardo’s view, only the introduction of technical innovations and international trade could prevent this scenario. Graaf (2001) stated that prescriptions for an interventionist role for the state became tainted by the excesses of the statist experiments in the late 1970s. The 1980s witnessed the declining influence of the Keynsian economics and paring down of the welfare state, coupled with resurgence neoclassical economics which stressed the role of the market. Neo-liberal policies were imposed on the third world with little regard to their potentially adverse consequences and the declining Soviet power allowed for a harder line to be adopted towards third world governments; aid gave way to demand for debt repayment and…show more content…
Most of these African countries witnessed violent transitions to a post-colonial era which included among other things, armed conflicts stemming from geopolitical disputes associated with boundary marking related processes. The African continent was faced with a number of challenges that limited economic growth performances during these periods and these included developmental challenges. Other factors that contributed to the slow economic growth during these periods include; inadequate resources mobilization and capital formation, and the continent’s skewed trade relations, yet new growth theories suggest that long run growth rate is boosted by the trade impede
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