Advantages of foreign trade
• It helps raise the standard of living of the people
• It helps the citizens of one nation to consume and enjoy the possession of goods produced in some other nation
• Optimum utilization of country’s natural resources
• Availability of all types of goods
• Specialization in specific products and services (comparative advantage)
• Focus on large-scale production which ultimately leads to increased exports
• Stability in prices throughout the world (ignoring cost of transportation etc.)
• Development of the means of transport and communication
• Increase in international co-operation and understanding
• Ability to face natural calamities
Disadvantages of foreign trade:
• Obstructs the development of home industries
• Economic exploitation of underdeveloped nations
• Endangers political dependency
• Exhaust the natural resources
• Import of harmful products
• Settlement of traders can harm international peace
• World wars
• Hardships of comparative advantage during wars
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