Question
How does the extent of foreign investment form the basis of international trade?
Solution
Extent of foreign investment:
(i) Foreign investment can boost trade in developing countries which lack in capital required for the development of mining, oil drilling, heavy engineering, lumbering and plantation agriculture.
(ii) By developing such capital intensive industries in developing countries, the industrial nations ensure import of food stuffs, minerals and create markets for their finished products.
(iii) This entire cycle steps up the volume of trade between nations.
