Question

Explain how the 'size of population' and the stage of 'economic development' are the bases of international trade.

Answer 1

1. Size of population:
   1. Densely populated countries have large volume of internal trade but little external trade because most of the agricultural and industrial production is consumed in the local markets.
   2. Standard of living of the population determines the demand for better quality imported products because with low standard of living only a few people can afford to buy costly imported goods.
2. Stage of economic development:
   1. At different stages of economic development of countries, the nature of items traded undergo changes.
      1. In agriculturally important countries, agro products are exchanged for manufactured goods.
      2. whereas industrialised nations export machinery and finished products and import food grains and other raw materials.