FREE ESSAY ON DEVELOPING COUNTRIES

DEVELOPING COUNTRIES

The More We Import From Developing Countries, The More They Will Import From Us
Low import levels from less developed countries raise economic, political and moral
questions. Fraser Hosford and Shane Roberts examine the theory and evidence to propose an
economic argument in favour of importing more from less developed countries.
This paper will use both qualitative and quantitative analysis to evaluate the
proposition that the more we import from developing countries, the more they will import
from us. For the purposes of this analysis, it will be assumed that Ireland aims to
maximise its net exports, rather than its real income, quality of life, or any other
measure of welfare. The many other arguments in favour of trade (such as the gains from
specialisation, scale and international competition) will therefore be ignored.
While there are several mechanisms by which an increase in Ireland's imports from
developing countries could theoretically lead to an increase in their demand for Irish
goods, there are a number of qualifications to this theory. There is, in practice, only a
very small link between Irish imports and future demand for Irish goods.
Section I of the paper will state the arguments in favour of the proposition. Section II
will examine the problems with these arguments and Section III will run three simple
regressions using trade data from the last 23 years to test the theory.