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Understanding the Importance of International Trade in Various Countries Whereas imports and exports in the United...

Understanding the Importance of International Trade in Various Countries

Whereas imports and exports in the United States each account for about one-eighth of total annual national income, in some countries the figure is much greater. Certain nations like Luxembourg must import practically everything!

For Critical Analysis:

How can Luxembourg have a strong economy if it imports so many goods and services?

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Answer #1

The economic prosperity that Luxembourg has is experienced by very few industrialised nations. Banking, steel and industrial sectors contribute to the growth of the economy. Though the economy imports various commodities like fuels and other consumer goods but it also exports in huge quantities items like machinery and steel products. The high GDP is because of the environment created for investors wherein the government encourages investments through various measures such as low corporate tax. Also, the fact that they have low population aids in their growth.

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