Zambia's export diversification: problems

A recurrent theme in discussions of the relationship between international trade and economic development is the importance of the problems created by the fluctuations and decline in the export earnings of Less Developed Countries (LDCs) • Among the possible explanations of this problem is the issue raised concerning the concentration of exports. Typically, most LDC' s exports are characterised by dependence on a narrow range of primary commodi ty exports. Therefore, this concentration of exports is always thought to be risky. Concentration reduces the chances of autonomous economic development in that export earnings fluctuations have adverse effects on domestic investment and hence on economic growth.For this growth to take place, the LDCs need additional amounts of resources, particularly foreign exchange since LDCs' economic development is not self-sustaining as questioned by Goulet (Goulet,1977,p.125) .To obtain this foreign exchange,these countries engage in international trade. It should also be emphasised here that in classical thought, international trade was regarded as the 'engine of growth' since it avails the trading partners with additional resources which could be used to increase investment in the economy which in turn could contribute to higher output and hence higher income.