How does foreign trade lead to the integration of markets across countries? Explain with an example other than those given here.

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 · Answer

Foreign trade leads to the integration of markets across countries because it creates an opportunity for the producers to reach beyond the domestic markets i.e., markets of their own countries. Producers can sell their products in the markets of their own country as well as in other countries all over the world. They can also compete in markets located in other countries of the world.
The buyers too have a choice between the goods produced in different parts of the world. It enables the consumer to buy according to his requirement.
The competition among the producers bring them closer to each other.
Sometimes the producers of other countries set up joint ventures as AIG have set up joint venture in insurance sector and are selling their products in India.
Thus in general, with the opening of trade, goods travel from one market to another. Prices of similar goods in two markets tend to become equal. And producers in the two countries now closely compete against each other even though they are separated by thousands of miles. Foreign trade, thus, results in connecting the markets or integration of markets in different countries.

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