Why international trade is important for developing country

Reference no: EM133564425

Questions:

1. Explain briefly why international trade is important for a developing country.

2. "It is not possible for trade to benefit all countries". Evaluate the validity of this statement in the context of the classical theories

3. According to a report by standard bank (2023), "traditionally, European countries are active investors in South Africa (United Kingdom, Netherlands, Belgium, Germany and Luxembourg), as well as the United States, Japan, China, and Australia. Most of the investments are directed to the financial, mining, manufacturing, transportation and retail sectors".

United States (US) is a source country for capital inflows into South Africa. You are informed that US is a capital abundant nation. The return on capital is higher in South Africa than in the US.

Use this information and a well-drawn diagram to explain (i) the effect of the flow of capital between the two nations on the nation's output and welfare and (ii) the effect of the flow of capital on world output and welfare.

Reference no: EM133564425

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