Question

In: Economics

1. What are three reasons why Larger markets (more people trading) are better for economic growth...

1. What are three reasons why Larger markets (more people trading) are better for economic growth than small markets? Explain why each reason is better. What does this suggest about the desirability to trade across national borders?

Solutions

Expert Solution

Trade is important for economic growth . When more people in a country are trading ,there is better economic growth of that country as compared to countries with less trade.Developing and emerging economies are playing a big role in trade and thus has been able to control poverty and inequality among countries and within countries.Again trade lowers prices and provides jobs to millions of people across the world .In a large country like America, 10% of the workers are producing goods and services which are exported abroad and thus provides jobs to 14 million people in America..Trade also plays a role in raising income and improve the working conditions of workers because in America exporters get wages 6% higher than non exporters and labour laws are very much respected.

All the 3 reasons help businesses become more productive and innovative. Producers get access to bigger markets and can increase their scale of production and competition as well.So in a larger market people can take the opportunities of trade and technology.

Access to ,international trade leads to economic development . International trade leads to economic growth through import of technology and increased productivity. Knowledge that comes from international buyers and competitors help in improving the performance of exporting firms.International trade can benefit developed and developing economies. Firms that participate in international market get more exposure to competition than those that produce for domestic market.


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