Question

Explain the difference between a “large country” and a “small country” within the concept of trade. What wheat-exporting countries would you consider “large”? What wheat-importing country would you consider “large”?

Answer 1

Ans) The foreign trade has contributed in the economic development of countries but on the other hand it had led to international inequality as the rich countries have become rich on the expense of poor countries.When a country specialises in the production of a few goods hence it exports these commodities because it produces cheaper hence it gains from the trade and there is increase in national income which in turns , raises the level of output and growth rate of economy. Thus the higher level of ouput throughtrade tends to break the vicious circle  of poverty and promotes economic development and the country becomes large countries. On the other hand As the rich countries have a large base of manufacturing industries hence by exporting their insustrial products at cheap rates they have price out small scale industry and cottatage industry hence such type of countries are forced to poduce primary products for exports mainly agriculture based hence such countries are small countries and they also have small size of domestic market which fails to absorb sufficient volume of output this lead to low investment.The wheat exporting large countries are US ,Canada, Australia and France as they have capital intensive technology to grow wheat and have economies of scale in the production of wheat hence the price of wheat is competitive in the wheat market and large importing wheat countries are Indonesia, Egypt,Algeria, Italy because of geographical and technological and economies of scale the cost of production of wheat is high as compared to the other economies of the world hence they import the wheat and are large wheat importing countries because of the amount of import.