Question

How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Answer 1

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 :

1. Creates opportunities for the producers to reach beyond the domestic markets or the markets of their own countries.
2. Import of goods from various countries provides a choice of goods for consumer beyond the goods that are produced domestically.
3. Producers of different countries compete with each other although they are thousands of miles away.