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Which is more preferable for economic growth, inward-oriented or outward-oriented trade? A. Favoring trade within the country's borders

B. Emphasizing trade with other nations
C. Both inward and outward trade equally
D. Neither inward nor outward trade is important for economic growth

1 Answer

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Final answer:

Outward-oriented trade, or emphasizing trade with other nations, is generally more preferable for economic growth. It allows countries to take advantage of comparative advantage, economies of scale, and a larger market, which stimulates economic development. Inward-oriented strategies are more limiting in comparison.

Step-by-step explanation:

When discussing which is more preferable for economic growth, inward-oriented or outward-oriented trade, it is generally observed that outward-oriented trade, emphasizing trade with other nations (Option B), is preferable for economic growth. This approach allows economies, especially smaller or low-income countries, to benefit from comparative advantage, enhancing production efficiency and access to a larger market, which in turn stimulates economic growth. Outward-oriented trade policies have been associated with fast-growing economies, as they enable these countries to integrate into the global economy, leverage economies of scale, and improve consumer choices. While inward-oriented trade, or favoring trade within a country's borders (Option A), can be beneficial for certain economic strategies, it often limits the potential for growth by constraining the market size and preventing competition. A balance of both inward and outward trade (Option C) could be ideal, but in practice, outward-oriented trade tends to offer a stronger platform for sustainable growth. Therefore, relying solely on inward trade or dismissing the importance of trade altogether (Option D) is not conducive to maximal economic growth.

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