Intl. trade & econ. growth: what’s the link?

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International trade contributes to economic growth through import/export effects, specialization, productivity increase, infrastructure improvement, and labor trade. Some countries depend on exports, including oil-producing countries, and immigrants contribute to productivity and send money home. Increased demand for products leads to higher revenues, and trade can lead to infrastructure improvements.

International trade and economic growth are two concepts that go together, because international trade contributes to the growth of a country in various ways. Some of these ways include the effects of import and export, specialization, productivity increase and infrastructure improvement. Exporting goods to other countries can contribute to the growth of the exporting country by increasing that country’s revenue.

The national economies of some countries are even dependent and supported by their exports. For example, some oil-producing countries depend on income from the export of crude oil and its derivatives to sustain their nations. Some of these countries actually plan their national budgets based on projections or calculations of expected oil export income. Besides crude oil, other countries also partially base their national budgets on income from agricultural products, precious stones, and even technology. This represents one way that international trade and economic growth are linked.

In addition to raw materials, international labor trade is also a component of globalisation. Immigrants bring the necessary skills to the countries where these skills are needed. Most immigrants from less developed nations send money to relatives in their country of origin, contributing to the economic growth of those countries. They also help increase the growth of the economies of the countries they live in by contributing to productivity. For example, migrant workers often work on farms where they provide labor to help prepare food products for sale locally and internationally. More skilled immigrants such as engineers, doctors and nurses contribute to the growth of the economy of their chosen country.

Another factor establishing a link between international trade and economic growth is increased productivity. When there is high demand for a product, countries that produce that product will automatically increase production to meet the demand for the product. This increase translates into higher revenues and an improvement in the country’s economy.

A vibrant culture of international trade also contributes to building an infrastructure framework to support trade. For example, a country’s demand for peanuts can lead to road construction and an improved transportation system to support production. If peanuts are grown on farms located in villages that previously had poor road networks, the government or other corporate interests could build better roads.




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