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How can external trade promote economic development and growth?
International trade permits increased specialisation than higher output permits economies of scale.
• A big market permits domestic producers greater scope for economies of scale. Not with trade the domestic market only permits Q1 output. Access to out of the country markets implies Q2 output at lowest unit cost.
• International competition encourages competition. Domestic organisations strive to turn into world class, adapting latest technology, product and procedure innovations which reduce unit costs.
Economic development and growth
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