Revista

Foreign trade enables each country to
specialize in the production of those goods
and services for which it has the greatest
relative advantages in comparison with
other countries.
Such geographical specialization helps to
improve the productivity and quality of
goods and services. It also leads to lower
cost of production.
1. GEOGRAPHICAL SPECIALIZATION
Foreign trade helps each country to make
optimum use of its national resources. Each
country can concentrate on production of
those goods for which its resources are best
suited. It can exchange its surplus for those
goods which it is not suited to produce. In
this way wastage of resources is avoided.
2. OPTIMUM USE OF RESOURCES
Foreign trade enables developing countries
like India to import machinery, equipment
and technology for rapid industrialization.
With the help of advanced technology and
capital goods from abroad an
underdeveloped country can use its natural
resources and increase rate of growth. Japan,
United Kingdom and USA have achieved
remarkable economic progress through
imports of raw materials and exports of
manufactured goods.
A country can earn valuable foreign exchange
through exports. Foreign trade also increases
income of government in the form of customs
duty.
3. ECONOMIC DEVELOPMENT
Foreign trade helps each country to produce
not only for home consumption but for
export to other countries also. It creates a
very wide market for the surplus output of a
country.
Every country can sell its surplus goods in
foreign markets. This leads to large scale
production which provides several
advantages.
4. ECONOMIES OF SCALE
Foreign trade generates employment
opportunities by assisting the expansion and
growth of agricultural and industrial
activities. It also offers direct employment to
a large number of intermediaries employed
in export and import trade.
5. GENERATION OF EMPLOYMENT
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