What is export biased growth and import biased growth? What is the effect of such growths...

What is export biased growth and import biased growth? What is the effect of such growths on the relative supply curve and PPF of an economy?

Expert Solution

Export biased growth is defined as growth which indicates expansion of export-oriented goods in a country, in short export biased growth results in the production of exported goods.

The impact of export biased growth are as follows:

a) It results in the reduction of a country's terms of trade

b) It results in a decrease in the welfare of the country

c) It results in an increase in the welfare of the foreign country's trade

Import biased growth is defined as growth which indicates expansion of import oriented goods in a country, in short, import biased growth results in the production of imported goods.

The impact of import biased growth are as follows:

a) It results in increasing the country's terms of trade

b) It results in an increase in the welfare of the country

c) It results in a decrease in the welfare of the foreign country's trade

The biased growth results in shifting the relative supply curve and PPF of an economy outward.

Rahul Sunny answered 3 months ago

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