Foreign trade has got an important place in the economic development of a country. What is the importance of foreign trade for economic development of country is stated below:
Firstly, foreign trade helps to produce those commodities which have a comparative cheaper cost than others. It results in less cost of production in producting a commodity. If all the countries adopt this procedure to produce these goods in. which they have less comparative cost, it will lead to availability of goods at a lower price.
Secondly, foreign trade increases the scope of market because of domestic demand and foreign demand for the product. So there is mass production. If the production of goods increases, average cost declines and price of goods declines.
Thirdly, foreign trade helps the people to get different varieties of goods both in quantities terms and qualitative terms.
Fourthly, foreign trade helps a developing country like India in its economic development. Iron and steel industry, has been established due to stored iron-ore and coal. But for the establishment of this type industry, we have to import technical knowledge from foreign countries. Had there been no foreign trade, then it would not have been only difficult but also too expensive.
Without foreign trade, it is not possible to fulfill the demand for petroleum products and it will retard the economic development of our country. There is also scarcity of consumer goods due to natural calamities or due to any other reason. During the time scarcity of consumer goods, we import these goods from foreign countries and keep prices stable which help people to get their commodities.
Due to all these above reasons, foreign trade has got an important place in every country.