| Sugar and developing countries: | | | | sustainable growth of the economy. The only solution |
| Introduction: | | | | to achieve sustainable growth and a reduction of |
| Protectionism is an economic policy where an | | | | poverty in developing countries and this can be |
| economy restrains trade between other economies, | | | | achieved through increased export and capital |
| these policies are aimed at discouraging imports and | | | | accumulation. However the restrictions on sugar |
| most of the policies used include tariffs, quotas and | | | | exports will result into a decline in export revenue |
| bans. Protectionism is aimed at protecting domestic | | | | and therefore result into increased poverty. |
| industries from international competition. | | | | Unsustainable growth in the economy: |
| Developing countries are agricultural countries where | | | | A country will benefit from trading and will further |
| the economy depends on agriculture for growth, | | | | experience absolute advantage in specialising and |
| most developing countries are in Africa some of | | | | trading in that which it has comparative advantage in, |
| these countries are sugar producing countries include | | | | most developing countries have comparative |
| Malawi, Mauritius, Zimbabwe and Swaziland are some | | | | advantage in the production of sugar and this is as a |
| of the countries that produce sugar at low costs and | | | | result of the existence of agricultural land and also |
| face trade restrictions in developed economies. | | | | cheap labour that make the final products to be les |
| According to Ricardo and Adam smith free trade is a | | | | expensive as compared to other countries, therefore |
| way in which two countries would gain by trading, | | | | if a restriction to trade in what the economy has |
| free trade ensures specialisation and therefore both | | | | comparative advantage then the economy will |
| countries would gain by trading even if one country | | | | experience a decline in economic growth and the |
| has comparative advantage in the production of the | | | | growth level will be unsustainable. |
| two goods produced. The two scholars advocated | | | | The debt problem: |
| for free trade and sugar protectionism has led both | | | | Most sugar producing countries are already faced |
| developing and less developing countries to loose. | | | | with the problem of debts, export revenue is in most |
| Protectionism of sugar imports into the developed | | | | cases used to repay the debts owned to |
| countries affects the less developed countries | | | | international finance organisations and if there is a |
| negatively and these effects are discussed in this | | | | decline in exports then this means that the country is |
| paper. | | | | not repaying its debts, as a result the debt problem |
| Sugar protectionism and developing countries: | | | | arises not only because of the inability to pay the |
| There are a number of problems that arise as a | | | | debts but also an increase in debt levels in order to |
| result of restricted trade on developing countries. | | | | finance imports which are mostly machines, crude oil |
| These factors include increased poverty levels, | | | | and vehicles which are relatively expensive than the |
| increased debt problems, a decline in resource | | | | agricultural products. |
| utilisation, lower export levels and therefore lower | | | | Increased dependency on foreign aid: |
| GDP, balance of trade, increased unemployment | | | | As poverty increases in these countries as a result of |
| levels and slow economic growth. | | | | increased unemployment and international debts then |
| Balance of trade: | | | | the developing countries to increase their |
| Developing countries are mostly depend on | | | | dependency on foreign aid, this results into increased |
| agricultural products for exports and in turn import | | | | under development and the increased debt problem |
| machinery and other capital intensive products, when | | | | due to unsustainable economic growth. |
| they face protective policies in the developing | | | | Increased dependency of foreign aid in government |
| countries they trade with then there is a high | | | | budgets is as a result of decline in the productivity of |
| possibility that the countries will face a deficit in trade | | | | a country, less production as a result of decline |
| where exports will be less than imports, therefore | | | | export of sugar will therefore mean that the country |
| protectionism in the sugar export market will result | | | | will depend on foreign debts and aid which will lead to |
| into increased balance of trade and also will result into | | | | increased inefficiency in the entire economy. |
| the debt problem where countries are forced to | | | | Decline in resource utilisation: |
| finance their imports through debts. | | | | The economy will experience a decline in resource |
| There is also a decline in export earnings and | | | | utilisation, agricultural land used for the purpose of |
| therefore the country is affected as the trade | | | | production of labour will no longer be utilised and |
| restrictions are put in place, export earnings add up | | | | therefore there will be increased idle resources in the |
| to the countries GDP levels and if the exports are | | | | economy which can be used for the purpose of |
| lower then the GDP level of the country is lower and | | | | economic development. |
| this means lower income to the general population of | | | | Conclusion: |
| the economy. | | | | It is clear that protectionism on sugar imports by |
| Unemployment: | | | | developed countries have negatively affected the |
| Most developing countries will produce both for the | | | | developing countries, further the developed countries |
| domestic market and also for export purpose, | | | | also experience an increase in their prices for sugar |
| therefore they produce surplus in order to export, | | | | because they purchase domestic products that have |
| when surplus is being produced for the purpose of | | | | higher prices than in the case where they would have |
| export the developing countries experience an | | | | imported from low price economies that have |
| increase in employment not only in labour terms but | | | | absolute advantage in production of sugar. In Adam |
| also resource employment, when there is a decline in | | | | smith theory and Ricardo's theory of trade they |
| demand in the export market this results into a | | | | advocated for free trade and through comparative |
| decline in employment levels in these countries. | | | | advantage countries would gain by trading and that |
| Unemployment will result from the closing down of | | | | barriers to trade would only lead to inefficiency. |
| export sugar industries and also a decline in | | | | References: |
| employment in sugar cane growing fields where | | | | Jostling T (2003) Key issues in the World Trade |
| production is labour intensive due to the low cost of | | | | Organization negotiations on agriculture, American |
| labour. Therefore the protectionism policy by the | | | | Journal of Agriculture, 85 (3) 663-667 |
| developed countries will result into an increase in | | | | Keeney R. and et al (2007) Distributional effects of |
| unemployment levels for those industries that directly | | | | WTO agricultural reforms in rich and poor countries, |
| and indirectly depend on sugar exports. | | | | Economic Policy, April, pp 289-337 |
| Poverty: | | | | Todaro M. (2004) Economics for a Developing World, |
| As unemployment increases in the developing | | | | McGraw Hill Publishers, New York |
| countries then there is an increase in poverty in this | | | | Willem H. and Richard M. |
| countries, poverty will result from lack of jobs and | | | | |