Question

How foreign trade begin integrate markets across countries?

Answer 1

Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.

• Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.

• Similarly for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.

• With opening of foreign trade, goods travel from one market to another. Choice of goods in the market rises.

• Prices of similar goods in two markets tend to become equal.

• Producers in the two markets or to say two countries now closely compete against each other even though they are seperated by thousands of kilometres.

• These foreign trade connects the markets of different countries.

Answer 2

Answer: Foreign trade leads to integration of markets across countries by the processes of imports and exports. Producers can make available their goods in markets beyond domestic ones via exports. Likewise, buyers have more choice on account of imports from other countries.