Question

1. Why did classical economists consider trade as the ‘engine of growth’?what is the counter view projected to this ?discuss.

Answer 1

Classical economists considered trade as the engine of growth because international trade played a key role in enhancing the economic development of a nation. According to them, a company will benefit by producing and exporting those goods that it can produce at a low cost. Similarly, it would be more feasible to import those goods that incurs a lot of expenditure when produced in the home country.

However, trade cannot continue to serve as the engine of growth in the present world because there are various substitutes available in the receiving countries for the primary commodities that are considered as the prime exports for the sending countries.