Albert Adiel

Michael Ascheberg

Border Region, Less Developed Region  Location Decisions

Improving Trade in Less Developed Region

Many root problems that LDCs face are challenges in facing the international community. For example,
Nepal. Nepal is having trouble with a loss of preferential market access as well as from climate change
and natural disaster. As we know, Nepal gain income from their textile and clothing industry, but after
massive earthquakes in 2015, they have to reconstruct the economy. So to help LDCs like Nepal there are
some ways that the international community or the UN can do to help, for example:

 Make cross-border trade cheaper

 Nepal can make regulatory and legal action that promotes domestic and foreign investment
 Nepal can make and create an environment that is beneficial to improve trade services

According to the theory of Location Strategy, the concept of this strategy is to minimize cost by picking
the most strategic location. So in order to encourage foreign investments to LDCs, the government of the
LDCs itself need to make their country more attractive in these aspects:

1. Less political risks, government rules: in the case of Nepal, the government can encourage FDIs
by imposing less tax so that foreign companies can invest and create their factories in Nepal. Nepal
gov can also create government deregulation in terms of their market control in Nepal, so that it
is easier for people to create new businesses, for foreign companies to come and invest in Nepal,
etc.

2. Labor talent, productivity and costs: the productivity of the labor itself is one of the most
attractive factor to attract FDIs, so Nepal gov can create an environment that encourages cheap
labor. And educate their labors from low skilled to high skilled, so that Nepal is not only used for
its low skilled and low paying labors. Also encourage the productivity of their people, especially
the citizens within the productive age range.

3. Availability of supplies and energy: since Nepal is famous for its textile industry, the country itself
have great supplies for their industry for example cotton farming. Government needs to help this
farming industry so that they don’t have to import supplies, and if they do need supplies from
other countries, impose less tax on imported products so that Nepal can maintain its
competitiveness for their textile industry.

4. Land/construction costs: land and construction cost is also important to make their country
attractive. Make it easier to buy land and properties and the government should charge less on
rented lands and facilities so that the land and construction cost is low.
Concerning the Border Regions the problem usually is that the countries both does not feel responsible
for the development and issues at the borders and they do have to less communication. So no one is
buiding for example infrastructure to improve the sustainable development. To solve the problem they
should/can establish cross-border-partnerships.

Another issue for many less developed countries are their location. Many are located at the equator, so
they have issues with diseases and hot weather.