Importance Of Trade Openness

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Trade is an important stimulator, of economic growth. It enlarges an economy’s consumption capacity, raises the world output, and provides access to scarce world resources, and an access to worldwide markets for products, without which the poor countries would not be unable to grow. The whole basis of international trade, is based on the fact that countries, do differ in their resource endowments, their preferences and technologies, their scale of economies, their economic, political, and social institutions, and their capacities of growth and development. Exports, provide foreign exchange that is, used for importing the consumption goods, intermediate and the capital goods and further this imports of capital goods and intermediate goods can…show more content…
The truth, that the openness of trade is positively, linked to economic growth of the countries, has helped the trade liberalization and openness to be a necessary part of the developing countries policy measures. By trade openness, it means that the reduction or complete removal of trade barriers and this idea has become very important in the policy making for both the developed and developing economies. There are so many different forms of trade like the transfer of technology, education flow and ideas sharing other than the trade in terms of only commodities. The restrictive trade policies and measures were followed by the developing countries in the start but now they have moved towards the liberalization of trade practices as the world has moved towards globalization. There is a strong support given in the literature of the idea that trade openness acts as an engine of the economic growth and the existing literature supports the positive relation between the different economic variables. Looking into the results of the trade openness in the developing economies, it is generally concluded that there are far less benefits of liberalization of trade than expected results. The economies have experienced fastest economic growth as a result of the trade liberalization and
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