Smith argues that international trade helps to educate a nation by exchanging knowledge and technology between different countries. This new knowledge of technology could lead to increased productivity and thus to increased economic wealth. When Smith was writing about international trade, his concern was for Britain and he favoured that Britain should trade with France instead of Portugal because it was “superior opulence”. I believe what Smith was saying is that it is more beneficial to trade with a country that has a more mature economy as it has a bigger market. Hence a wider market is necessary for economic development.
For instance, the values of coefficients of FDI and investment in Model 4 are 0.82 and 0.14 respectively. This indicates that 1 % increase in the share of FDI in GDP leads to 0.82% increase in LPG, and 1 % increase in share of physical investment in GDP leads to increase in LPG by 0.14%. It can be inferred, therefore that FDI encourages boosting of productivity growth than physical investment. It could be due to the direct role that multinational enterprises have on the production process of the local firms through both the forward and backward linkage effects. Multinationals do try to increase their profit by increasing efficiency of local firms through importing their capital, advanced technologies, marketing and managerial skills (Baldwin and Dhaliwal 2001; Baldwin and Gu 2005; Blomstrom and Kokko 1998; Globerman and Ries 1994; Rao and Tang 2005).
However, immigration should be encouraged because there are obvious benefits to the economy of the host country in terms of state revenue, labor market, and country development. Immigration helps the host country to develop revenue by increasing the gross domestic product (GDP), and through taxes because immigrants
These motivations produce the pressures to avoid waste and cut costs. The firms that are owned by the state tend to be more efficient. Economic growth would be another advantage of capitalism. With the individuals and firms facing motive to be creative and work hard, which this creates a place of change and economic expansion. This will end up helping to increase the GDP and will improve living standards.
The next positive aspect which is taken into consideration is that the developing countries now can receive sources of capital, new technologies from developed countries, which is very essential for the growth of a country. And in return, the developing countries let the developed countries’ companies do business in their countries. For instance, you can see McDonald’s store in almost every countries. In general, globalization has benefited both developing and developed nations, and became one of the most important factors that affect a country’s
It will undoubtedly play a decisive role in the global economy in the XXI., Giving a powerful impetus to the development of a new system of international economic and political relations. Globalization caused by objective factors of world development, the deepening of the international division of labor, scientific and technical progress in the field of transport and communications, which reduces the so-called economic distance between countries. Approximately 1/5 of the income of the industrialized countries and the developing countries 1/3 directly dependent on exports. An estimated 40-45% of the world engaged in manufacturing and about 10-12% in the services directly or indirectly related to foreign trade, which remains the principal means of redistribution of global income. Allowing to obtain the necessary information from anywhere in real time and make decisions quickly, modern telecommunication systems is unprecedented facilitate the organization of international capital investment, co-production and marketing.
What is export-oriented strategy. Export oriented industrialization is indispensable for economic growth. Export-oriented industrialization is related to the theory of comparative advantage. And this strategy is a trade and economic policy which this strategy aiming industrialization process of a country. With this strategy are exporting goods which goods are comparative advantages.
The innovation of technology is expanding from changing and positively affect the economy. In eras of technological improving, it causes industries to increase their productivity, so the country's economy is growing and improving its financial health (as cited in Moritz,
Institutional factors are important prerequisites for economic growth such as a structured legal system; a stable financial and banking system, a good education system, political stability, and these factors are most often the sources of economic development. A central question at this point emerges: “Does economic growth lead to economic development?” The answer to that question lies in the effects of economic growth, which often are: higher incomes, improved economic indicators of welfare, higher government revenues, creation of inequality, and negative externalities and lack of sustainability. Economic growth leads to an increase in GDP (Gross Domestic Product), thus increasing the average income of labor within the respective nation, thus improving the general state of welfare. Furthermore, the increase in income, leads to a collective increase in government revenue as higher incomes are being taxed. The revenue is spent on important sectors of welfare such as health,
As in our economy agriculture sector plays an important role by enhancing the gdp of our country.as in case of Paksitan ,agriculture sector contribution is about 24%.beyond all other changes in the economy agriculture sector is still playing major role in the economy of paksitan. The main target of underdeveloped nations is efficient economic expansion. Exports are considered as the fuel for economic expansion. The drive for fast economic growth in underdeveloped countries is generally accomplished by means of trade. Large numbers of scientific studies pertaining to the role of exports in elevating the economic development are available in the literature.