1. FOREIGN TRADE IS AN
“ENGINE”
OF ECONOMIC GROWTH

2. Foreign Trade
Foreign trade is the process of focusing on
the resources of the globe and objectives of
the organisations on global business
opportunities and threats in order to
produce, buy, sell or exchange of
goods/services world-wide.
Foreign trade is all commercial
transactions (private and
governmental, sales, investments, logistics, an
d transportation) that take place between two
or more regions, countries and nations beyond
their political boundary.

3. Economic Growth
Economic growth is the increase in the
amount of the goods and services produced by
an economy over time.
 It is conventionally measured as the percent
rate of increase in real gross domestic
product, or real GDP.
 “Economic growth” typically refers to growth of
potential output.

4. Foreign trade as an ENGINE of
economic growth
International
trade
Posing
challenges
Development to
meet them
Innovation and
creation to meet
the competition
Specialisation
and division of
labour
Enhancement of
productivity
More income
Economic
growth

5. Foreign trade as an ENGINE of
economic growth
Foreign trade the market for a country’s
output. Exports lead to increase enlarges in
national output and become an engine of growth.
 Increased exports lead to greater utilization of
existing capacities, reduce costs which may lead
to a further increase in exports.
 Expanding exports provide greater employment
opportunities.
 Increased foreign demand lead to large production
and economies of scale with lower unit costs.

6. Foreign trade as an ENGINE of economic
growth
 Opens up the opportunities of global market to
the entrepreneurs of the developing nations.
 Makes the latest technology readily available
to the businesses operating in these
countries, resulting in increased competition
both in the domestic and global fronts.
 To compete with their global counterparts, the
domestic entrepreneurs try to be more efficient
and this in turn ensures efficient utilization of
available resources.

7. Foreign rade as an ENGINE of economic growth in
India.
The opening of Suez Canal in 1869 led to a
reduction of distance between India and Europe which
led to an increase in the demand for India’s
commercial crops. As a result, production and exports
of commercial crops increased. The rise in the output
of such agricultural crops as oilseeds, cotton, jute and
tea was largely due to a flourishing export trade.
Many export processing zones and special
economic zones have been established to facilitate
manufacture or reprocessing for export. All such
efforts create a lot of employment opportunities and
lead to an increase in incomes which lead to the
demand for many new products which are very often
manufactured in the country itself.

8. Conclusion
Here I would like to conclude by saying that
foreign trade is an ‘engine’ of economic growth.
Specialisation , division of labour, enhancement
of productivity, posing challenges, development to
meet them, innovation and creation to meet the
competition lead to overall Economic growth of
World as a whole.

9. Bibliography
 www.wikipedia.com
 www.ask.com
 www.slideshare.com
 International Business – P. Subba Rao

10. THANK YOU