Question

determine whether TRUE/ FALSE/ UNCERTAIN and Explain

1. More productive firms gain more from export liberalization.

Answer 1

This statement is true , Export liberalization is a part of trade liberalization, which promotes uninterrupted exchange of goods and services between different countries. Under this, tarrifs barriers like duty, surcharge and nontarrif barriers like quotas , licenses etc engaged in export and import abolishes to boost open and free market.
So Trade liberalization changes the market and resource structure of the country, these reforms lead to reallocation of the entire structure. Export liberalisation promotes export market in the country and develops competitive environment . This increased competition provides opportunity to high efficiency and cheaper production for domestic firm .So low productive firms can not face this pressure and exit from the market. The remaining firms adopts this environment and continue to produce and those with high productivity or quality attain larger market shares and earn higher profits and expand to serve in export market. These high productive firms continue to exporting and selling locally attain more gains and profit . So it is true to say that ' More productive firms gain more from export liberalisation .'