Poverty tends to lead to more poverty as an increasing negative multiplier effect.
Trade is one of the main causes of uneven development
Trade is one of the main causes of uneven development
- Most of the world's trade is between HICs
- HICs and TNCs have a lot of power in world trade
- They want to pay as little as possible for raw materials which often come from LICs
- There is often more supply than demand for raw materials which keeps prices low.
- They want to pay as little as possible for raw materials which often come from LICs
- Processing of products happens in NEEs and HICs which adds value to the product (e.g. changing coco beans into chocolate) which keeps the main profit in the richer countries.
- This way the wealth stays with the richer countries and LICs are not able to develop.