The Instigator
Pro (for)
0 Points
The Contender
Con (against)
3 Points

Local production of goods is the best way to stimulate economic growth of developing countries

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Voting Style: Open Point System: 7 Point
Started: 7/14/2015 Category: Economics
Updated: 2 years ago Status: Post Voting Period
Viewed: 693 times Debate No: 77641
Debate Rounds (3)
Comments (0)
Votes (1)




Unprocessed goods (ex. lumber) used for the production of products are cheaper to import, meaning less money earned by the exporter, than importing processed goods (like furniture). This means that during the entire export/import process of the production of a particular good, the countries that export more processed goods (furniture) than unprocessed goods (lumber) end up making most of the money available in that process. The reason is simple - the steps it takes to gather a raw material require less money and therefore the amount of money to be gained in its export is much less, while the steps it takes to process raw materials into a final good costs more with the subsequent export of the product rendering more money.

If a developing and/or economically suffering country would want to breath new health into it's economy, it would make more sense to focus on importing skilled laborers, people who can take the raw materials the country already has, and process them into finished goods the country needs; instead of exporting these materials, at a cheap price, to be processed elsewhere only to import their finished product, at a expensive price, at a later date. Keeping the entire process as local as possible would keep the money circulating at a local level and the closer the money is to the people, the easier access they have to it, resulting in a better off economy.


A developing nation may not have the capital, human capital development, or the ability to produce "processed" goods at a lower cost than foreign competitors. I will henceforth refer to "processed" goods as capital-intensive goods as they appear to be goods that require machinery or other forms of capital to produce more intensively than the labor involved in their production. In a country that is abundant in labor and has relatively scarce capital resources, the law of supply and demand will set the cost for labor low and the cost for the rents on capital to be high. In an international economy, a nation may most competitively export that item with which they have a comparative advantage in producing. Developed nations will not buy expensive manufactured goods from these nations when they can purchase them from a nation that is capital abundant and is therefore able to produce them cheaper. It would then be in the best interests of the less developed nation to export most heavily those products for which the inputs, labor or capital, are relatively cheap, thus representing the most efficient allocation of their scarce resources. [1]
A developing country may then generate economic growth by specializing in this manner and the government would then be well advised to use the resources generated from this trade in human capital development and other such programs designed to spur industrial growth. I might also add that assuming that the consumers in a less developed nation will have a strong demand for capital-intensive consumer goods, such as consumer electronics, is far from a certain assumption. When individual incomes are low, a greater percentage of their incomes will be dedicated to subsistence goods, agricultural products, etc. As incomes rise, one can only eat so much food and therefore demand for manufactured goods will outpace demand for these subsistence goods. It is not until a sizable middle class develops that such nations will have a significant demand for manufactured goods. [2]

Debate Round No. 1


It appears the fact that needs to be understood is which scenario would be the most economically fruitful to a developing country: focus solely on exporting their raw materials or focusing on improving their ability to process their own raw materials locally into goods they can need. Con has shown that capital-intensive goods are difficult for developing countries to produce because they lack the resources or money to produce them. Con also points out that citizens of developing countries would not need these capital-intensive goods because these goods typically satisfy needs that extend out once more basic needs like food and shelter are taken care of. Since it is mutually assumed that citizens of developing countries are more concerned with this basic needs it can also be safe to omit the topic of capital-intensive goods in this debate as they are not relevant to the current economic health of developing countries. Economic health of a developing country can therefore be defined as the basic needs of food and shelter being taken care for the highest amount of people. To this regard, Con puts forth that it would be the most efficient for a government of said developing country to export its raw resources and invest the money gained in this manner to improve human capital development and other industrial growth programs. To this I can only agree as that is what I imply in the topic of my argument by keeping the production of goods local. It would make more sense to invest in training one's own people to produce the products that one's own people uses instead of importing these products. It appears the Pro and Con have come to an agreement. From this experience I have better understood what topic I would like to debate and will open up a new debate for it. If the Con would like to challenge me, he/she is more than welcome. Since the Con convinced me to agree with him, I concede this debate to him/her.


Thank you for the stimulating debate and I would look forward to debating that topic, I believe there remains much to be said about the benefit of local production vs. importation of goods particularly from a trade policy standpoint as trade theory ignores many salient concerns on that topic.
Debate Round No. 2


Indeed. Especially since the reach of corporate power has caused traditional boundaries between countries to seemingly disappear, it would be very interesting to visit this topic, as you put it, from a theoretical standpoint of trade, particularly with understanding if there are any regulations to control how much corporations can take from any country. I am very curious to know the governed reality of an entity that functions on a global scale. Is the global level of existence today akin to unexplored frontiers of times past? Are the laws that govern how an entity functions on a global level made by the first entities that reach such a level of existence? If so, then the push for "free trade" policies makes perfect sense. Nothing else would better facilitate the movement of corporate entities among various countries and cultures. Also, what the hell is the U.N. doing concerning all this? So much to research, so much to know. I am starting to feel overwhelmed.

Either way, this debate belongs to Con. After you respond it will be over. How do I ensure you receive the credit as winner? I was never good at these formalities.


Typically multinational corporations have to abide by the local laws in each nation they are present in. This can be risky for the corporation due to the possibility that the government might nationalize their enterprise in the area or impose taxes on them while supporting their own local businesses. The UN and WTO are the chief venues through which international trade rules are made and enforced though the UN lacks power and the WTO is not perceived to be legitimate in the eyes of most less developed countries. The need to operate according to each nation's laws when doing business is part of what makes international business so complicated but an example of a large corporation that has proven to be a hindrance rather than a help to each nation it has located plants in is Coca-Cola. Citizen Coke is an excellent read and outlines the idea of modern predatory capitalism very nicely.

As far as how to concede the debate, I believe the voters just understand based off of what was written here. It was a pleasure discussing these ideas with you.
Debate Round No. 3
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1 votes has been placed for this debate.
Vote Placed by ax123man 2 years ago
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Total points awarded:03 
Reasons for voting decision: Debate conceded to con