Question

How is foreign trade interconnecting the markets in different countries? Explain with example.
(class 10 CBSE SAMPLE PAPER 2017-18 SOCIAL SCIENCE)

Answer 1

Foreign trade leads to the combining of market across countries. For e.g Chinese toys in India and Indian readymade garments in other countries result in connecting the markets or integration of market in different countries. Due to opening of foreign trade, commodities move from one market to the other.This increases the choice of goods in the market. As a result prices are similar kinds of commodities in the different markets are likely to become equal. In this way, foreign trade leads to the integration of markets across countries.

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Answer 2

Foreign trade provides opportunities for both
producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another.
Competition among producers of various countries as well as buyers prevails. Thus, foreign trade leads to integration of markets across countries. For example, during Diwali season, buyers in India have the option of choosing between Indian and Chinese decorative lights and bulbs. So, this provides an opportunity to expand business.