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rob asked in Business & FinanceInvesting · 9 years ago

doMany developing countries feel exploited by trading their commodities and raw materials at relatively low pr?

Many developing countries feel exploited by trading their commodities and raw materials at relatively low prices while paying relatively higher prices for processed goods using the same exported resources.

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  • 9 years ago
    Favorite Answer

    you could even ask that question of a reasonably developed country such as Canada.

    Many Canadians wonder why we ship raw materials (Oil is a great example) to the USA for refinement into high end product. In the case of oil, that Keystone Pipeline project is supposed to transport raw bitumen via pipeline to EXXON refineries in Texas where it will be refined into oil products for sale in the USA and world markets.

    There is a double whammy here.

    1. The shipment of light sweet crude oil for example would result in a certain royalty being paid to the Province of Alberta in this case. But bitumen is a raw material and thre is controversy as they don't want to pay a full royalty on this non-refined product or for the "Oil equivalent" after processing....so the people of Alberta lose money.

    2. Refining the product in Canada would create jobs in this country which affects more than just the oil industry....suppliers of services, construction materials...the benefits are much greater if higher end product is made in this country.

    That is why in a way, many people were not unhappy to see the failure of the Keystone Pipeline approval. There is now discussions about doing that refining in Canada, twinning a pipeline through the mountains to the Pacific coast (Kitamat, BC) and selling a more profitable product to Asia.

    Same thing with the forest Industry....in the past the USA was the main buyer of lumber products....but hassles with the domestic lumber industry in the USA over the last decade with their imposition of huge "penalties" that often as not are applied first and then through litigation found not valid....has resulted in the Canadian lumber industry opening markets for finished lumber products in Asia as well.

    Canada's economy has traditionally been one of selling commodities (mining, forestry, agriculture and Oil) but that is slowly changing.

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  • 9 years ago

    No one is holding a gun to their heads & forcing them to sell these raw materials at low prices. They can hold on to their oil, or copper, or bauxite, etc, and wait for better prices. If the prices for these raw materials is cheap, it is because there is ample supply.

    Heck, the same can be said for processed goods. Lots of manufacturers around the world - China, Japan, Europe, U.S, etc.

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  • ?
    Lv 7
    9 years ago

    I doubt if they know the difference or they wouldn't agree to let mining and other ventures go on.

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