International Economic Growth

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International trade and economic growth are two concepts that go together, because international trade contributes to the growth of a country’s economy in numerous ways. Some of these ways consist of the effects of imports and exports, specialization, increased productivity and improved infrastructure. The exportation of goods to other countries for example can contribute to the growth of the exporting country by increasing the income of that country.
The national economies of some countries are even dependent on and sustained by their exports. For instance, some oil-producing countries depend on the income from the export of crude oil to sustain their nations. Some of these countries actually plan their national budgets based on projection
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Both would cause the PPF to shift outwards. Expansion of a given resource will favour the good that uses that resource input intensively.
Orthodox mainstream economic models advise that there is a natural relationship between trade and growth; both procedures involve an increase in the value of economic output. In the mainstream economic paradigm, economic growth is often explained as an increase in the economy’s productive capacity.
In terms of the Hecker (HO) model, economic growth can be illustrated as an outward shift in the production possibilities frontier (PPF). Since such economic growth enables the economy to attain production points on a higher social indifferent curve, orthodox neoclassical analysis concludes that economic growth directly raises human welfare.
International trade enables the economy to reach the same higher indifference curve that the outer shift in the PPF made
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If the economy is not producing the quantities specified by the PPF, then that means that resources are being managed unproductively and the production of society will decrease. The production possibility frontier shows there are boundaries to production, so for an economy to achieve efficiency, it must elect what combination of goods and services can be produced.
When the PPF shifts outwards, we know there is growth in an economy. Alternatively, when the PPF shifts inwards it indicates that economic growth is dwindling as a result of a deterioration in its most efficient allocation of resources and optimum production competence. A decline in economic growth could be a result of a decrease in supplies or a shortage in technology.
An economy can be producing on the PPF curve only in theory. In reality, economies constantly struggle to reach an optimal production capacity. And because scarcity forces an economy to forgo one choice for another, the slope of the PPF will always be negative; for example if the production of product A increases then production of product B will have to decrease
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