Question

write various factors that lead to the expansion of foreign trade in our country after 1991​

Answer 1

Answer:

Here are seven reasons for international trade:

Reduced dependence on your local market. ...

Increased chances of success. ...

Increased efficiency. ...

Increased productivity. ...

Economic advantage. ...

Innovation. ...

Growth.

Explanation:

Some of the important ways in which foreign trade contributes to economic growth are as follows:

i. The primary function of foreign trade is to explore means of procuring imports of capital goods, without which no process of development can start;

ii. Trade provides for flow of technology, which allows for increases in productivity, and also result in short-term multiplier effect;

iii. Foreign trade generates pressure for dynamic change through (a) competitive pressure from imports, (b) pressure of competing export markets,- and (c) a better allocation of resources;

iv. Exports allow fuller utilisation of capacity resulting in achievement of economies of scale, separates production pattern from domestic demand, increases familiarity with absorption of new technologies;

v. Foreign trade increases most workers’ welfare. It does so at least in four ways: (a) Larger exports translate into higher wages; (b) because workers are also consumers, trade brings them immediate gains through products of imports; (c) it enables workers to become more productive as the goods they produce increase in value; and (d) trade increases technology transfers from industrial to developing countries resulting in demand for more skilled labour in the recipient countries.

vi. Increased openness to trade has been strongly associated with reduction in poverty in most developing countries. As the historian Arnold Toynbee said ‘civilisation’ has been spread though ‘mimesis’, i.e. emulation or simply copying.

In short, trade promotes growth enhancing economic welfare by stimulating more efficient utilisation of factor endowments of different regions and by enabling people to obtain goods from efficient sources of supply.

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