International trade to developing countries?
what is the importance of openness to international trade for a developing country's economic growth?
Answer:
The answer lies in the benefits that trade provides to a country. A country is better off if it directs its resources to producing goods in which it has a comparative advantage and selling those goods to other countries. A comparative advantage exists when a country can produce a good cheaper than another country. This happens because the country may be blessed with a certain natural resource that another country may not have. The country is also better off it it imports goods produced more cheaply in other countries that if it tries to produce them itself. In this way the country can gain from trade and can use its gains (usually by way of foreign exchange earnings) to finance its growth and development.
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Answer:
The answer lies in the benefits that trade provides to a country. A country is better off if it directs its resources to producing goods in which it has a comparative advantage and selling those goods to other countries. A comparative advantage exists when a country can produce a good cheaper than another country. This happens because the country may be blessed with a certain natural resource that another country may not have. The country is also better off it it imports goods produced more cheaply in other countries that if it tries to produce them itself. In this way the country can gain from trade and can use its gains (usually by way of foreign exchange earnings) to finance its growth and development.
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