What is foreign trade? How does it integrates markets? Explain with example.
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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.
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- Foreign trade is the exchange of capital, goods, and services across international borders or territories. It is also known as international trade.
- Such trade represents a significant share of gross domestic product.
- It provides opportunities for both producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another.
- 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.
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