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Trade & Poverty Relation

Essay by   •  October 31, 2010  •  Essay  •  2,501 Words (11 Pages)  •  2,023 Views

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What is Trade: Exchanging articles for equal value is trade. Initial system of trade was based on barter system when currency did not exist. People did not have excessive needs so they exchanged only the surplus produce. Value of products then too was determined on the basis of demand and supply depending on the necessities.

Present world necessities pushed trade to establish its importance. Thus trade became important factors of economy. To improve individual/ national/ international economy trade plays important role. Trade we can identify in forms of labour/ services and goods. Earning, savings and expenditures are the key sources to analyze the economic structure of whether individual or society. Research and development gave foundation to modern technologies resulted high competition; those who don't follow timely, they lag behind.

Who are the poor: People unable to access to the basic needs of life due to lack of sufficient resources or the buying power. In simplest way people who come under the poverty line determined internationally. I feel poverty too is classified in two categories; Poor without basic amenities and poorest of poor without basic needs of human. Nearly 60 % of present world population of 6.35 billion is poor and nearly 30-40% is the poorest of poor who lack even very basics for life. Most poor live in rural villages mainly depend on agriculture and labour. They have small piece of agricultural lands or partially employed or unemployed. With income generated from their resources are enough to meet basic needs.

Contribution of unorganized sectors is significant in rural and urban areas of developing countries. Nearly 80% or more are directly or indirectly involved in these sectors where labour regulations are followed least. Wage determination is based on the demand and supply of labour force. Countries with thick and illiterate population generally lack much demand of labour force, so, people have no option but to work in existing condition. Most prefer hiring cheap labour to bring down cost of production; nevertheless, they are unable to compete internationally as use traditional methods or semi modern systems. Trading of most their products too is through informal channels where more and more mediators are involved thus real people involved does not get adequate share.

In some developing countries role of mediators are more important than the buyer and seller. For example: A small illiterate farmer depends contractors to dispose off the produce, goes to market then distributed through agents to other wholesale markets of the cities and then to retail shop. By the time it reaches from producer to the buyer the price escalates 10-15 times, this situation is not in agriculture alone rather exists with industrial and medicine products too; a living example of one country the ex-factory cost of a tablet is say Ð... cent but when reaches to the final customer the price is 50 cents. Transition of one product from many hands only inflates the prices. Escalation during the transition goes into the hands of mediators. They are only stockiest and do no value addition. The real players' buyers and sellers suffer in the middle of middlemen. Similar situation is in textiles or other exports, many hands are involved from raw to finished products without adding value, unwanted escalation of cost leads to failure in competitive market. Finally the producer is still poor despite the hardship as does not get right price. Governments need to pay attention for the reformation by introducing systems of mechanism that reduces high involvement of mediators. Producers or villagers need to be better equipped with communication and resources. So that the producer and final buyer the right price. Keeping in mind the Major population lives in villages, education, research and development is in accordance to the requirements of the population. Many areas in agricultural and forest sectors are still unexplored. Most agricultural products come to the market in raw condition, whereas, if value added products comes to market can generate more jobs. More jobs mean more, income, consumption thus more resources. Funds allotted for rural growth in many cases is unutilized or absence of takers or slips into the hands of corrupt politicians or bureaucrats. Best way is to train the villagers and invest in the project, controlled by the village individuals or group and share the benefit with them. Thus the assets and machinery belong to financial institution and invested money is also covered timely provided marketing of produce in right hands. But before that education system be evolved that trains villagers to add the value to their produce. I happened to visit one of the tourist spots close to tribal area. I bought a bottle of traditional squash from one tribal society shop, made of some plant root that was used as traditional medicine too. Local tourists said that was good for digestion, cool and soothing and give freshness. What shocked me! The item with such value was sold in old used beer bottle with lousy label. She could sell only 5-10 bottles a day that too to people who knew the value. This is the area where the research and development is required make the product to the taste of people, good look and better marketing. If this product is properly packed, and marketed could reach many parts of the county and overseas. Knowing the value would appreciate sales thus will benefit community. Similar situations we can observe in other areas too. Absence of awareness among local leaders and appropriate Governments to initiate value added agricultural products to flow causing village products either disposed off at pity value or left to get decomposed. These are assets but we need to know to use it for the welfare of the community. So we read how value addition to produce and minimizing mediators help minimizing poverty and generation of employment in developing countries.

Labor; whether skill or unskilled is trade of services, is significant to present world order- Is an important factor of economic construction of any country. Skill laborers are in grate demand any where in the world. But in developing countries lack of opportunities many times give disappointing situations so search their fortunes overseas. For unskilled laborers without education; opportunities and living conditions are very discouraging. Lack of opportunity in rural areas pushes them to urban cities to overpopulate. Nearly 50% of developing countries lack modern education. And over 60% from rural population of developing countries are still either illiterate or semi-literate, especially, women education is discouraged. So they stay back in education standard and self dependence. They find opportunities only in unorganized



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