Access to Markets and Trade Agreements and the Wellbeing of Societies

Important characteristics of global economic trade and investment relationships give rise to interdependency between countries at varying levels of development. These trade and production agreements can affect the well-being of different societies in different ways, notably in relation to poverty, unemployment and health.

Relationship: Trade between EEs and Developed Countries

Examples of how trade takes place

• Large volumes of Apple’s iPhones are manufactured in Shenzhen, China and exported to markets in developed countries around the world.
• Trade operates both ways. Asian EEs are important markets for western media companies like Disney Adding further complexity, Chinese and Indian companies are now buying and setting up their own businesses in developed countries. Tata, an Indian company, owns the Jaguar factory in Coventry. This strategy is helping TNCs from EEs to increase their share of world trade.

How it affects societal wellbeing

• Skilled Chinese workers earn around US$600 a month producing increasingly sophisticated devices for developed country consumers. These kinds of jobs have allowed China’s people to develop rapidly.
• Apple shareholders in the USA also benefit greatly from sales of goods made in China.
• Increasingly, the well-being of “blue collar” workers in developed countries depends on investment from China and India. The well-being of 30,000 workers in Port Talbot in Wales was threatened when India’s Tata announced closure of the steel works. 

Relationship: Trade between EEs and Developed Countries

Examples of how trade takes place

• TNCs based in developed countries, such as Tesco and Marks and Spencer, source many of their food and raw materials from LDCs. Supermarkets use cheap suppliers of fruit and flowers based in many of the world’s poorest countries
• Global agribusinesses like Cargill buy large areas of land in LDCs and employ local people to work in vast agricultural estates but often for low pay. 

How trade affects societal wellbeing

• Quality of life can be poor for LDC farmers because agricultural trade is very competitive; when too many countries produce the same commodity, like coffee, prices tumble due to over-supply.
• Also, many developed countries tax agricultural imports in order to protect their own farmers. This impacts negatively on the well-being of LDC farmers. The EU imposes trade tariffs on imports of much produce that can also be grown within the EU, making it hard for LDC farmers to sell here. 

Relationship: Trade between EEs and Developed Countries

Examples of how trade takes place

• Some Chinese manufacturing companies have moved their factories to Ethiopia because Chinese workers have become more expensive to hire. This means that Ethiopia is now trading merchandise and not just raw materials.

How trade affects societal wellbeing

• Ethiopia’s GDP is increasing as a result of Sovereign Wealth Fund (SWF) investment from, and trade with, China. 
• Alongside trade, China is increasingly lending SWF money to LDCs which helps build health and education infrastructure.