What are the benefits of Foreign Trade to producers and consumers?
FOREIGN trade creates an opportunity for the producers to reach beyond the domestic markets.
- Producers are able to sell their products not only in domestic market but also in other countries.
- Producers can also buy from the world market where raw material and labour is cheap.
- Similarly for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.
- The opening of trade goods travel from one market to another. Choice of goods in the market rises.
- Prices of similar goods in the two markets tend to become equal.
- Producers in the two countries now closely compete against each other even though, they are far away to each other.
- Thus, the foreign trade connects the markets in different countries.