How can Foreign Trade Boost the Development of a Country?
“Foreign trade is an indispensable tool. If there had been no trade, there would not have been any stimulus to create surplus. Trade alone is responsible for the organization of production. ”
No country can progress without paying attention to its foreign trade. Trade is the foundation of economic activities. It promotes capital formation and brings sectoral and external economies in the industrial activities of a country. Not only this, import can be financed well and surplus capital can be generated in a country that has sound exports.It strengthens the relations, both economic and political, with other trading countries and provides an opportunity to enter into custom unions. It promotes the hidden talent of entrepreneurs and thus augments the comparative advantages in a country. In this way, an assortment of goods in huge quantities can be produced. This leads to an unexpected increase in the productivity graph of a county.
Foreign trade is an indispensable tool. If there had been no trade, there would not have been any stimulus to create surplus. Trade alone is responsible for the organization of production. It is entirely different from those kinds of production, which can be developed without trade. It includes new investments in new industries.
Export occupies a place of supreme importance in the development process of the economy. Export is the key variable in the development of industries and agriculture structure of the country. People are able to get the benefit of diversified consumption. From export, results a more efficient allocation of resources. It can be said that expansion of export trade is utmost necessary for the economic development of the country.
The dependence of a country’s national income upon its export of goods and services is the first thing to reckon with. If export grows, it gives rise to new demands in the exporting country for inputs to contribute to the physical expansion of production.
Hence, the greater are the purchasers of a country’s output, the higher is the national income. The classical and new classical economists attached much importance to international trade in the development of a country. They regard foreign trade as an engine of growth. Economic growth and foreign trade cannot be studied in exclusion. There is a profound causal relationship between them.
Author - DeeKay
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