Question

the second gains came from the indirect effects of trade related to increased productivity, how are these benifits obtained?.Give an example

Answer 1

Answer : Trade has indirect benefit that has resulted in an increase in the productivity in an economy as follows :

• Firstly, imports exposes domestic firm to greater competitive pressure while giving them access and availability more and better input available with them. In order to gain maximum domestic firm gain maximum and productivity output produced by domestic firms.
• Exporters has been increased productivity through analysis and better exposers to overseas customer and exporters analysis the productivity of the business in systematic and logical manner.
• productivity gains within firms, trade reallocation of resources in systematic and logical towards most productive and systematic manner.

Example : Trade has increased productivity shown by China as in there country when there are no barriers to trade than there productivity has been increased as there productivity is almost double in order to increase the trade.