International Trade and Economic Development

Abstract

A Recebt study by the U.N. Secretariat provides ample proof, if further proof were needed, that the problem of the economic development of the low-income countries cannot be solved without these countries becoming not only producers, but also exporters of manufactured goods, on an important scale.1 At present 86 per cent of the exports of the ‘developing countries’2 consists of primary products, and only 14 per cent of manufactured goods. But the world market for primary commodities expands only slowly, owing to the low income elasticity of demand. This is partly due to the low income elasticity of food consumption in the wealthy countries and the rapid growth of their own agricultural production, and partly to economies in the use of materials in industry and the development of synthetics. Since 1938, the volume of trade in manufactures has more than trebled, while the volume of trade in primary products has increased only by two-thirds.