How does foreign trade integrate the markets? Explain.

Read the sources given below and answer the questions related to them:


Source B – Foreign trade and integration of
markets

Foreign trad3e creates an opportunity for the producers to reach beyond the domestic markets, i.e., markets of their own countries.
Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world. Similarly, for the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produces.

Q- How does foreign trade integrate the markets? Explain.




With the opening of trade, goods travel from one market to another. It creates an opportunity for the producers to reach beyond the domestic market. Producers can sell their products not only within the country but also in the markets of other countries. When foreign goods enter into a market, they have to compete against local products. If they happen to be inferior they will not gain a market. If they happen to be comparatively expensive they may not readily find consumer acceptance. These products will have to adjust, according to the prevailing prices and quality. If the imported product is better than the local product, the local producers will try to improve the quality of the product. In either case, the price will adjust and finally become equal or near equal or competitive in the two markets. This phenomenon is known as the integration of the market.