Question 30 of 36
Q.Explain reasons of Foreign trade. [Any 3]
Gujarat GsebGujarat Board (GSEB) HSC Commerce Board 2025Subjective· 3mImportance★★★★★
83% · 30/36 Questions
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Start your 14-day free trial to unlock the full solution →Foreign trade arises from unequal resource distribution, cost/comparative-advantage differences, and the need for technology, capital goods, wider markets and varied consumer wants.
Reasons for foreign trade (any three):
- Unequal distribution of natural resources — natural resources, climate and minerals are not evenly spread across countries. A country imports goods it cannot produce (e.g. crude oil) and exports its surplus goods, so trade becomes necessary.
- Differences in cost of production / comparative advantage — each country can produce certain goods more cheaply/efficiently than others. By specialising in these and trading for the rest, all countries gain — the basis of the theory of comparative advantage.
- Need for technology and capital goods — developing countries import advanced machinery, technology and capital goods to build industry, which they cannot make themselves. …
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