CHAPTER: 4 GLOBALIZATION AND THE INDIAN ECONOMY

1. Give the benefits enjoyed by a local company in a joint production with a MNC.
(a) A MNC can provide money for additional investments like buying new machines for faster production.
(b) A MNC might bring with them the latest technology for production.
(c) The local companies after setting up production jointly with MNCs, have access to international market.

2. Mention two ways by which MNCs control production.

a) MNCs control production on the basis of their enormous wealth which may exceed the entire budget of a
government of a developing country. This shows their enormous power and influence.
(b) Large MNCs in developed countries place orders for production with small producers. The products are
supplied by these small producers to the MNCs which then sell these, under their own brand names, to the
customers.

3. On account of globalization, what are the three ways by which countries can be connected?
(a) Movement of people between the countries in search of better education, better jobs, better incomes etc.
(b) Movement of goods and services between the countries by way of exports or imports.
(c) Movement of investment and technology between the countries.

4. Explain the advantages of globalisation.

(a) Rapid improvement in technology, especially, the development in the field of information and
communication technology is an outcome of globalisation.
b) Liberalisationof foreign trade and foreign investment policy by removing barriers on foreign trade and
foreign investment, so as to facilitate easy import and export of goods, has also been due to globalisation.
(c) Globalisation and the close competition among the producers—both local and foreign producers— has been
of advantage to the consumers, especially the well-off section in the urban areas.
d) Consumers have greater and better choices to make. As a result, these people today enjoy much higher
standard of living than earlier.
(e) Globalisation has also created new opportunities for companies producing services, particularly those
involving in Information Technology.
Besides this, a number of other services like data entry and accounting are now being done cheaply in countries
like India and are being exported to developed countries.
OR

a) Under this process, goods and services along with capital, resources and technology can move freely from
one nation to another.
b) It has increased the movement of people between countries. People usually move from one country to
another in search of better income, better jobs or better education. Earlier the movement of people between
countries was less due to various restrictions.
c) Rapid improvement in technology has been one major factor that has stimulated the globalization process.
d) For instance, advancement in transportation technology has made much faster delivery of goods across long
distances possible at lower costs.
e) Container services have led to huge reduction in port handling costs.
f) The cost of air transport has fallen which has enabled much greater volumes of goods being transported by
airlines.
g) Developments in information and communication technology (IT in short) have brought a revolution in
telecommunications. It has made e-banking, e-commerce, e-learning, e-mail and e-governance a reality.
 h) Globalization has resulted in greater competition among producers and has been of advantage to consumers,
particularly the well-off section. Rich people now enjoy improved quality and lower prices for several
products.

5. Explain the role by WTO in liberalization in international trade?

a) WTO, which was started at the initiative of the developed countries, establishing rules regarding
international trade & ensures that they are obeyed by its members.
b) Despite of WTO’s permission to free trade for all, it has been noticed that the developed countries have
unfairly retained trade barriers. On contrary, WTO rules have forced the developing countries to remove the
trade barriers.
c) But the unfair way of retaining trade barriers by the developed countries depicts its bias in favour of them.
6. What are Special Economic Zones (SEZs)? Write two characteristics of Special Economic Zones
(SEZs).
(a) These zones are expected to have world-class facilities such as electricity, water, roads, transport, storage,
recreational and educational.
(b) Companies setting up their production units in the SEZs are exempted from the payment of taxes for the
initial five years.
(c) Government has also allowed flexibility in the labour laws to attract foreign investment.

7. How has competition benefited people in India?

(a) Indian producers have improved their technology and quality to compete with foreign goods.
(b) Price of Indian goods have reduced to match those of foreign goods.
(c) Some Indian companies have entered into collaboration with foreign companies and some MNCs have
invested in Indian companies, thus benefiting both.

8. What is the role of MNCs in the globalization process?

a) MNCs play an important role in the process of globalization.
b) They not only bring their products to a country but also the new business policies & cultures.
c) They also help in increasing competitiveness among theIndian companies.
d) At present most of us are able to use the latest models of cars.
e) The setting up of large number of MNCs develops broad outlook among the people of a country.

9. What has been the impact of Globalization on India? Explain.

a) It has enabled some large Indian companies to emerge as MNCs themselves such as Tata Motors, Infosys.
b) It has also created new opportunities for companies providing services like information technology.
c) Greater competition among producers has been of special advantage particularly to the well off sections of
consumers in the urban areas.
d) Consumers have greater choice and enjoy improved quality and lower prices for various products. Thus,
they are enjoying a higher standard of living than was possible earlier.
e) Impact of globalization has not been uniform on the producers and workers. MNCs have increased their
investment in India and they have been beneficial for them. Their products have a large number of well-off
buyers. In these industries and services, new jobs have been created and also the companies supplying raw
materials to these industries have prospered.
f) Several of the top Indian companies have been able to benefit from the increased competition. They have
invested in new technology and production methods and raised the standard of their products. Some of them
have gained from successful collaboration with foreign companies.
10. How has globalization been advantageous to both producers as well as consumers in India? Explain.
Advantages of globalization for consumers
(a) They have greater choice.
(b) Better quality of products is available for consumption due to competition.
(c) It has reduced the cost of goods and services considerably.
Advantages of globalization to producers
(a) They now have access to international markets for their products.
(b) They have easier access to foreign investment to enhance their production.
(c) Collaboration with MNCs has added up their performance and profits.

11. Barriers on foreign trade and foreign investment were removed to a large extent in India around
1991. Justify the statement.
a) It was around 1991, that some far-reaching changes in foreign trade policy were made in India.
b) The government decided that time had come for Indian producers to compete with producers around the
globe.
c) It felt that the global competition would definitely improve the performance of producers within the country,
since they would have to improve their quality to face the stiff competition from all over the globe.
So, keeping the above need in mind, the government removed the barriers on foreign trade and foreign
investment to a large extent.
d) This implied that goods could be imported and exported easily and also foreign companies could set up
factories and offices in India, i.e., foreign investment could be promoted now.
e) It was against this background that policy of liberalization was introduced to promote trade and businesses
with the rest of the world.
f) It was a right step for India’s economic development.

12. ‘‘Fair globalization would create opportunities for all and also ensure that benefits of globalization
are shared better.’’ Support the statement. Or How can government play a major role in making
globalization fair?

a) Government policies must protect the interests of not only the rich and powerful but of all the people in the
country.
(b) Government should ensure that labour laws are implemented properly and workers get their due share.
(c) Small producers should be supported to improve their productivity and performance so that they can
compete for international market.
(d) Government can use trade and investment barriers, if needed.
(e) Government should be ready to negotiate at WTO for ensuring fairer rules.
(f) If necessary, government should align with countries with similar interests to oppose the domination of
major and powerful players in WTO.

13. Why do governments try to attract more foreign investment?

(a) It helps in improving the financial position of the people by accelerating growth of the economy.
(b) It creates new job opportunities in the country.
(c) The government gains from additional taxes levied on the profits made from the foreign investments.

14. Mention three ways in which MNCs are spreading their production units across the globe.
(a) Setting up partnerships with local companies.
(b) Using the local companies for supplies.
(c) Closely competing with the local companies or buying them up.

15. What factors are kept in mind by the MNCs while setting up their production units? (Or)
Explain the conditions that determine MNCs setting up production in other countries.
a) Close proximity to the market.
(b) Availability of skilled and unskilled labor at low cost.
(c) Availability of other factors of production.

16. How have our markets been transformed in recent years. Explain with examples.
In the last few years, our markets have been transformed as mentioned below:

a) There is a wide choice of goods and services in the markets.

b) The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers of
the world are available in the markets.
c) Not only this products are affordable and within reach of the people.
d) Thus a few years back, there were only few brands of different goods in the markets. A consumer did not
have real choice and had no option to purchase a particular brand. But now he has a number of options
between Indian as well as foreign brands.

17. Why did “Cargill goods” become the largest producer of edible oil in India? Explain.

(a) Cargill foods is a very large American MNC. It has bought over smaller Indian companies such as Parakh
Foods and expanded the range of its production of edible oils in India.

(b) Parakh foods had built a large marketing network in various parts of India. It has become the largest
producer of edible oils in India.

18. How is the MNC able to cope up with large demands all over the world and control prices?
a) An MNC is a company that owns or controls production in more than one nation.
b) They set up offices and factories for production in regions where they can get cheap labour and other
resources.
c) The MNC not only sells its finished products globally but more importantly, the goods and services are
produced globally.
d) At times, MNCs set up production jointly with some of the local companies of these countries. But, the most
common route or MNC investments is to buy up local companies and then to expand production. MNCs with
huge wealth can quite easily do so.
e) These large MNCs have tremendous power to determine price, quality, and delivery and labour conditions for
these distant producers. In this way, MNCs are able to cope up with large demands all over the world and
control Prices.
19. How does foreign trade integrate the markets of different countries? Explain with suitable
examples.(Or) Mention any five features of foreign trade. (Or) “Foreign trade is an important
component of globalization.” Explain any three points in this regard.
a) Foreign trade provides an opportunity for both producers and buyers to reach beyond markets of their own
country.
b) There is a flow of goods, services and finance across different countries.
c) There is huge competition among producers of various countries. This brings producers closer to each other.
d) Sometimes, the producer of other countries set up a joint venture with the local producers.
e) Prices of similar goods in the two markets tend to become equal.

20. Explain the role played by technology in the globalization. Give three points. (Or) ’Rapid
improvement in technologies has been a major factor that has stimulated the globalization process.’
Support the statement with suitable examples. (Or) “Information and communication technology has
played a major role in spreading out production of services across countries.” Justify the statement with
examples. (Or) Explain the factors that have enabled globalisation. Or How has information and
communication technology stimulated globalisation? Explain with example.
The factors that have enabled globalisation are as given below:
1. Technology:

a) In the past fifty years, several improvements in technology have taken place.
b) For example, in transportation technology, containers are used for the transportation of goods which are
placed in containers that can be loaded intact on to ships, railways, planes and trucks. Containers have led
to huge reduction in port handling costs and increased the speed with which exports can reach markets.
c) Similarly, the cost of air transport has fallen. This has enabled much greater volumes of goods being
transported by airlines.

(2) Information technology:

a) Telecommunication facilities – telegraph, moblie phones,fax – are used to contact one another around the
world and to communicate from remote areas.
b) This has been facilitated by satellite communication devices.
c) Internet enables to send instant electronic mail and talk across the world at negligible costs.
d) Now a news magazine published for London readers can be designed and printed in Delhi.
e) The designing is done on a computer.
f) After printing, the magazines are sent by air to London.
g) Even the payment of money for designing and printing from a bank in London to a bank in Delhi is done
instantly through the Internet e., e-banking.

(3) Liberalisation of foreign trade and foreign investment policy:

a) Removing barriers or restrictions set by the government is liberalisation. Under liberalisation goods can
be imported and exported easily.
b) Foreign companies are allowed to set up factories and offices in other countries.
c) Thus liberalisation has enabled MNCs to increase their investments in other countries as India.
d) As a result of greater foreign investment and greater foreign trade, there is greater integration of
production and markets across countries.
e) Globalisation is this process of rapid integration of interconnection between countries.

OR
 a) Rapid improvement in technology has contributed greatly towards globalisation. Advanced technology in
transport systems has helped in the delivery of goods faster across long distances at lower costs.
b) Development in information and communication technology has also helped a great deal.
Telecommunication facilities — telegraph, telephone, mobile phones, fax are used to contact one another
quickly around the world, access information instantly and communicate from remote areas. This is
possible due to satellite communication devices. Teleconferences help in saving frequent long trips across
the globe.
c) Information technology has also played an important role in spreading out production of services across
countries. Orders are placed through internet, designing is done on computers, even payment of money
from one bank to another can be done through e-banking through internet. Internet also allows us to send
instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible cost.

21. In what ways have liberalization of trade and investment policies helped the globalization process?
Removing barriers or restrictions set by the government is known as liberalization.
a) With the liberalization of trade, industries are allowed to make decisions freely about what they wish to
import or export.
b) Goods are now being imported and exported easily.
c) Companies can set up factories and offices in other countries e.g., Tata Motors, Infosys, etc.
d) Activities of many MNCs have increased foreign investment and foreign trade which has led to greater
integration of production and markets across countries’ and thereby globalization process.
e) Domestic companies are free to compete with producers around the globe.

22. What does WTO stand for? Write its four features. Or Give three arguments in favour of WTO.
(1) WTO stands for World Trade Organization.
(2) a) World Trade Organization (WTO) is a powerful international organization.
b) It aims at liberalizing international trade.
c) It establishes rules regarding international trade and ensures that these rules are obeyed.
d) Nearly 164 countries of the world were the members of the WTO.
e) WTO is supposed to allow a free trade for all countries. But in practice, it is found that the developed
countries have unfairly retained trade barriers.

23. What is WTO? Describe various functions of WTO.

a) WTO is an organization that intends to supervise and liberalize international trade.
b) It deals with regulation of trade between participating countries.
c) It oversees the implementation, administration and operations of the covered agreements.
d) It is supposed to allow a free trade for all.
e) It provides a forum for negotiations and for settling disputes.
f) It is also a centre of economic research and analysis.

24. What steps have been taken by the government to attract foreign investment?
a) Industrial zones, called Special Economic Zones (SEZs) are being set up.
b) SEZs are to have world class facilities: electricity, water, roads, transport, storage etc.
c) Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five
years.
d) The government has also allowed flexibility in labour laws g., workers can be hired for short period.
25. What is a trade barrier? Why did the Indian Government put up trade barriers after Independence?
Explain.
a) The restrictions set by the Government to regulate foreign trade are called trade barriers. Tax on imports is
an example of a trade barrier.
b) The Indian Government had put barriers to foreign trade and foreign investment after independence to
protect the domestic producers from foreign competition.
c) Imports at that stage would not have allowed local industries to come up.
d) India allowed imports of only essential items such as machinery, fertilizers, petroleum, etc.

26. What would happen if Government of India puts heavy tax on import of Chinese toys? Explain.
a) The cost of Chinese toys will increase.
b) Less Chinese toys would come in the Indian market.
c) Indian buyers would have lesser choice in the market and toys will become more expensive.
d) For Indian toy makers this would provide an opportunity to expand business as there will be less
competition in the market.

27. How do Multinational Companies manage to keep the cost of production of their goods low? Explain
with examples. (Or) Explain the conditions that determine MNCs setting up production in other
countries?

a) MNCs set up offices and factories for production in regions where they can get cheap labour and other
resources. Example, Countries like China, Bangladesh and India. They also provide with the advantage of
cheap manufacturing locations.
b) MNCs also need close-by markets for their manufacturing goods. Mexico and Eastern Europe are useful for
their closeness to the markets in the US and Europe.
c) Besides these, MNCs also require skilled engineers and IT personnel and a large number of English
speaking people who are able to provide customer care services (India possibly tops in this area).
d) All these factors help MNCs in saving costs of production by 50-60%.

28. How do we participate in the market as producers and consumers? Explain with three examples.
a) As producers of goods and services we could be working in any of the sectors like agriculture, industry or
services.
For example, a farmer who sells wheat to a flour mill. The man at the mill grinds the wheat and sells the
flour to a biscuit company. The biscuit company uses flour, sugar and oil to make packets of biscuits. It sells
the biscuits in the market to the consumer. Biscuits are the final goods, i.e., the goods that reach the
consumer and people as consumers buy.
b) We as producers in the market could be made to sell the produce to the moneylender at a low rate in return
for a timely loan.
For example, in case of small farmers; the failure of crops often makes loan repayment impossible. They
have to sell a part of their land to repay the loans.
c) As consumers we participate in the market when we purchase goods and services that we need. As
individual consumers we often find ourselves in a weak position. Whenever there is a complaint regarding a
good or service that had been bought, the seller tries to shift all the responsibility on to the buyer.
d) For example, a long battle had to be fought with court cases to make cigarette manufacturing companies
accept that their product could cause cancer.

29. How are local companies benefitted by collaborating with multinational companies? Explain with
examples.
When local companies enter into a joint venture with MNCs:

a) First, the MNCs provide money for additional investments for faster production.
 b) Second, MNCs bring with them the latest technology for enhancing and improving the production.
c) Some Indian companies have gained from successful collaborations with foreign companies.
Globalization has enabled some companies to emerge as multinationals.
d) Parakh Foods was a small company which has been bought over by a large American Company —
Cargill Foods. Parakh foods had built a large marketing network in various parts of India as a well-
reputed brand. Parakh Foods had four oil refineries whose control has now shifted to Cargill. Cargill is
now the largest manufacturer of edible oil in India making five million pouches daily.

30. Define the term liberalization. Explain the reasons why the Indian Government started the policy of
liberalization in 1991. (Or) ‘Barriers on foreign trade and foreign investment were removed to a large
extent in India since 1991’. Justify the statement.

Removing barriers or restrictions set by the government on foreign trade and foreign investment is what is
known as liberalization.
The Indian Government removed these barriers because:

a) Liberalization of trade and investment policies allows Indian producers to compete with producers around
the globe leading to an improvement in performance and quality of products.
b) After the barriers on foreign trade and foreign investment were removed to a large extent, goods could be
imported and exported easily and also foreign companies could set up factories and offices in India. This
has led to an increase in trade with different countries.
c) Businesses are allowed to make decisions freely about what they wish to import or export due to the
liberal policies of the government.
d) Doors of investment opened up for MNCs. They have been investing large sums of money in India and
have been seeking to earn large profits.

31. Why had Indian government put barriers to foreign trade and foreign investment after
independence? Explain. (Or) Why had the Indian government put barriers to foreign trade and foreign
investments after independence? Analyse the reasons.

a) The Indian government after independence had put barriers to foreign trade and investment. This was done
to protect the producers within the country from foreign competition. Industries were just coming up in
the 1950s and 1960s and competition from imports at that stage would not have allowed these industries
to develop and grow. Imports of only essential items such as machinery, fertilisers, petroleum etc. was
allowed.
b) Another reason was to protect the Indian economy from foreign infiltration in industries affecting the
economic growth of the country as planned. India wanted to move faster to catch up with the main
industries in the world market and therefore had to keep an extra watch on its progress in international
trade and give incentives to the more rapidly growing industries through fiscal tariff and other means.

32. How are MNCs able to cope with large demands from all over the World and control prices?
Large MNCs in developed countries place orders for production with small producers.

a) The MNCs sell these under their own brand names to the customers.
b) As they control the market with the huge demand, they are able to control prices.

33. “A wide ranging choice of goods is available in the Indian markets.” Support the statement with
examples in context of globalisation.

Globalisation has led to integration of markets across countries. The Indian markets are now flooded with a
wide ranging choice of goods. Import from other countries has led to an expanding choice of goods beyond
what is domestically produced —

a) We have a wide variety of goods and services before us in the market.

b) The latest models of digital cameras, mobile phones and televisions made by leading manufacturers of the
world like Sony, Samsung etc. are available in the market.
c) Every season, new models of automobiles can be seen on Indian roads. Today Indians are buying cars
produced by nearly all the top companies in the world.
d) A similar explosion of brands can be seen for many other goods like footwear. For example, Adidas,
Nike, Reebok, Puma and many more.

34. In spite of Globalization, creating good quality products and expanding market, how is it affecting the
stability in jobs for the workers?

a) Employment of ‘flexible workers’.

b) Increased competition, objective to lower costs, the axe falls on the ‘labour costs’—temporary jobs given.
c) Longer working hours for labour to get suitable salaries.

35. How do Multi-National corporations (MNCs) interlink production across countries? Explain with
examples.

a) MNCs set up offices and factories for production in regions where they can get cheap labour and other
resources; eg., in countries like China, Bangladesh and India. These countries also provide with the
advantage of cheap manufacturing locations.
b) At times, MNCs set up production jointly with some of the local companies of countries around the
world. The benefit of such joint production to the local company is two-fold. First, the MNCs can provide
money for additional investments for faster production. Secondly, the MNCs bring with them the latest
technology for enhancing and improving production.
c) Some MNCs are so big that their wealth exceeds the entire budgets of some developing countries. This is
the reason why they buy up local companies to expand production.
eg. Cargill Foods, a very large American MNC has bought over smaller Indian companies such as Farakh
Foods.
d) There is another way in which MNCs control production and that is by placing orders for production with
small producers in developing nations; eg., garments, footwear, sports items etc. The products are
supplied to these MNCs which then sell these under their own brand name to customers. MNCs also enter
into close competition with local companies thereby influencing production in distant locations.

36. What is globalization? Explain with three examples how top Indian companies have benefitted from
globalization.
a) Globalization is the process of rapid integration or interconnection among countries.
b) It is the integration between countries through foreign trade and foreign investments by multinational
corporations.
c) It means the coming together of various economies of the world to form a global economy.

The top Indian companies have benefitted from the increased competition and globalization.

a) They have invested in new technology and production methods and raised their production standards.
b) Some have gained from successful collaborations with foreign companies.
c) Moreover, globalization has enabled some large Indian companies to emerge as multinationals
themselves. For example, Tata Motors, Infosys, Ranbaxy, Asian Paints, Sundaram Fasteners etc.
37. What is an MNC? Give two examples of Indian companies that have emerged as MNCs. What are the
harmful effects of MNCs to a host country? Give three examples.
a) A Multi-National Corporation (MNC) is a company that owns or controls production in more than one
nation. The goods and services are produced globally. The production process is divided into small parts
and spread out across the globe.
b) Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram
Fasteners (nuts and bolts), etc. are some of the Indian companies which are spreading their operations
worldwide as MNCs.

Harmful effects of MNCs to a host country:

a) Small producers compete or perish. MNCs have posed major challenges for a large number of small
producers and workers. The small manufacturers have been hit hard due to competition. Several of the
units have shut down rendering many workers jobless. Batteries, taps, tyres, dairy-products, vegetable oil
are some of the industries that are badly affected due to stiff competition from MNCs.
b) Uncertain employment. In order to maximize the profit MNCs look for a location with minimum labour
costs. Faced with competition, most employers these days prefer to employ workers on temporary basis
so that they do not have to pay workers for the whole year. This has changed the lives of workers and
their jobs are no longer secure.
c) The Condition of employment. Workers also have to put in very long working hours and work night shifts
on a regular basis during the peak season. Wages are low and workers are forced to work overtime to
make both ends meet. The workers are denied their fair share of benefits and no longer get the protection
that they enjoyed earlier, for example, the Indian garment export industry often deny their workers their
fair share of benefits.

38. How has globalization been advantageous to both the producers as well as the consumers in India?
Explain.
a) They have invested in newer technology and production methods and thereby raised their production
standards.
b) They have gained from successful collaborations with foreign companies.
c) Globalization helped in the development of IT sector.
d) Good quality products are being produced at lower prices.
To Consumers. There is greater choice before consumers who can enjoy improved quality and lower
prices for several products.
e) People today, enjoy much higher standards of living than was possible earlier.

39. How has globalization benefitted India? Explain with five examples.

a) Greater competition among producers (both local and foreign) has been advantageous to consumers,
particularly the well-off section. Rich people enjoy improved quality at lower prices for several products
and enjoy a higher standard of living.
b) MNCs have increased their investments in India over the past 20 years in industries such as cell phones,
automobiles, electronics, soft drinks, fast food and services such as banking.
c) New jobs have been created in all these industries and services.
d) Top Indian companies have benefitted from the increased competition. They have invested in newer
technology and production methods.
e) Some Indian companies have gained from successful collaborations with foreign companies.
Globalization has enabled some companies to emerge as multinationals.

40. How is the Government of India trying to attract more foreign investment? Explain with examples.
 a) All the barriers and restrictions on foreign trade and investment have been removed to a large extent.
b) Liberalization of investment policies has allowed Indian producers to compete with the producers around
the globe.
c) Allowing privatization of many public sector industries by the government.
d) Allowing businesses to make decisions freely about what they wish to import or export.
e) The government has allowed flexibility in labour laws to attract foreign investment for the benefit of
companies.

41. What is the meaning of SEZ? Mention any three features of SEZ.

SEZ or Special Economic Zones are industrial zones set up by the Central and State Governments with world
class facilities in electricity, water, roads, transport, storage, recreational and educational facilities. Three
features of SEZ:

a) The companies who set up production units in the SEZs do not have to pay taxes for an initial period of
five years.
b) Government has also allowed flexibility in the labour laws to attract foreign investment. This is done to
reduce the cost of labour for the company.
c) These are being set up to attract foreign companies to invest in India.

42. “Advancement of international trade of a country is an index of its economic prosperity.” Justify the
statement with five arguments. “Advancement of international trade of a country is an index to its
economic prosperity”.

a) As no country is self-sufficient in all resources, it cannot survive without international trade.

b) If the balance of international trade is favourable, a country will be able to earn more foreign exchange.
c) International trade encourages a country to develop secondary and tertiary sectors for exporting goods
which can fetch more foreign exchange.
d) A country’s economic prosperity can be gauged by the health of its international trade.
e) A country can earn large amounts of foreign exchange through international trade.