Introduction
To understand why some countries export finished products like cars and computers while others ship out raw commodities such as coffee and sugar, we have to go back to colonialism, where the roots of this trading relationship began. When colonizing countries 'discovered' continents like Africa, they began trading small amounts of manufactured products such as guns for large amounts of raw goods, like tea and spices. The local people also had finished products that they offered to trade, but the colonizers found that this gave competition to their countrymen back home, so they decided to only buy raw goods.
As we'll see, countries that sell products like coffee have a tough time getting a good price in today's global markets.
When the price of coffee falls, the people who grow it suffer. But what happens to an entire country if coffee, or another cash crop, is the primary thing it produces? When a country gets little revenue from its exports, it often cannot look after its own people and has to get help. The International Monetary Fund is an organisation that many poor countries rely on. Based in Washington D.C., the IMF loans money to countries in need, but first it tells them how they have to change their economies. Critics say that these changes-known as Structural Adjustment Programs - just make the poor countries poorer because they have to develop their economies according to the terms of the wealthy countries that fund the IMF. Argentina is an example of a country that relied heavily on IMF advice and support throughout the 1990's. Today it is a country in crisis. How did this happen? Click here to learn more.
|
