The raw material can be have added value before it export to other country. There are not so relevant to measure the growth and development of the countries.
Trade Dependence.
This dependence takes various forms. Usually, developed countries will control international good or commodity market, export or import or both. The world price and world demand of commodity were determined by colonial country or rich country such as United States of America and European Countries. Not only the commodities. It also involves invisible trade such as insurance and shipping control.
As we know, trade or international trade including import and export are very important to developing countries. It is because it can increase national income and government revenue through the export of goods and services and import tax. But then, it also depends on the economic condition in developed or rich country. For example in 2008, there are crisis in United States of America. When the consumption drop, Malaysian economic was affected until Najib Razak, Prime Minister of Malaysia had to inject RM67 billion into the economy to stimulate the economy. So, trade is very important to developing country to growth and develops their country. Trade dependence is relevant to explain economic growth and development of developing countries.
Financial Dependence.
A country can be financially dependent on other sources especially on other economically-superior nations. This term is often used to describe the situation where the process of infrastructure building and capital accumulation, to name a few, are dependent on financial means sourced from other countries. Not only are that, many countries, notably the least-developed nations, heavily dependent on foreign sources to finance their annual budget. Some developing countries are also borrowing heftily from foreign financial sources to plug the hole left by budget deficits. Malaysia, however, should not be considered as financially-dependent in covering the deficit as 97% of our national debt is sourced from domestic sources such as Employees Provident Fund (EPF) and others.
