How Did Trade Contribute to Development?
The question “How did trade contribute towards development?” In discussions about globalization, the question “How did trade contribute to development?” may be a frequent topic. This question concerns trade in manufactured and consumer goods, as well as mineral fuels. This article will focus on the role trade plays in developing countries and how exports of these goods can improve the quality-of-life of consumers. These items contribute a much smaller amount to development than the exports to mineral fuels and chemicals.
Exports of minerals fuels and chemicals
Minerals products are a key contributor to global development. According to the U.S. Geological Survey the value added by American industries using mineral products was $13.2 trillion in 2006. Exports of non-fuel minerals are increasing at a rapid pace, with the U.S. accounting for more that a third global consumption. Nonfuel minerals are essential for the development of industrial processes. Their availability is now more competitive than ever.

Imports of manufactured goods
As middle class growth in developing countries increases, so does their desire to import goods. Developing countries are now contributing more than 40 percent of U.S. exports, and have significantly increased their presence in manufactured goods exports. In the same time period, EU exports increased by almost four times to China, while Japan’s share increased with 81 percent. Imports from developing countries have benefited economies across the world, and in 2006, they contributed nearly 30 percent of total U.S. exports.
Imports of consumer products
Consumption of consumer goods in developing countries has been a key driver of economic growth. Imports of these goods have contributed to substantial improvements in household welfare. This is partly because imports are more affordable than locally made products. This leads to a reduction in real wages in some sectors. Imports also mean lower prices for domestic goods. Despite this, many households in developing countries still enjoy net welfare benefits from imports and this distributional effect tends to be progressive.
Exports of manufactured goods in developing countries
Exports of manufactured goods are a major source of support for developing countries. These countries also have the advantage of leveraging the local labor force to produce products that are more competitive. Several developing countries have been successful in diversifying their exports over time. This is evident in countries like India, Bangladesh, Singapore, China and Malaysia. These countries are diversifying their exports to higher-paying goods.
The impact of trade liberalization on poverty
This article reviews recent literature about the impact of trade liberalization and poverty. It asks if our understanding has changed over the last decade. While liberalization generally increases income and lowers poverty, evidence indicates that these changes have heterogeneous effects on poor households. We will be discussing two of these effects in this article and the implications for policymakers. We will also consider the role of factors such the labor force and exchange rate in determining the impact of trade liberalization.