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Question
How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.
Solution
Foreign trade is the main channel which connects the markets of various countries. Foreign trade leads to the integration of markets across the countries as follows :
- Creates opportunities for the producers to reach beyond the domestic markets or the markets of their own countries.
- Import of goods from various countries provides a choice of goods for consumer beyond the goods that are produced domestically.
- Producers of different countries compete with each other although they are thousands of miles away.
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