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Economic development is described as sustained growth in income per capita over a period of time which usually involves a structural and institutional change in an economy In addition economic development includes the reduction of relative and absolute poverty decreasing infant mortality increasing employment and life expectancy improvements to social welfare Economic development creates a greater economic and social equality Per capita income is the most common measurement of development a country must be able to increase their income in order to achieve economic development and hence the Gross National Product GNP can be used as an indicator of development Other indicators such as the human development index can be used to determine improvements in social welfare International trade effects the economy such that it increases the Aggregate Demand AD as well as becoming a source of inputs for production International trade based on the theory of comparative advantage will improve efficiency in allocating resources as well as allow firms to reach economies of scale thereby reaching competitive prices of international markets When an economy involves itself in trade under the right circumstances it is able to shift the Production Possibility Curve PPC curve outward and achieve greater levels of output This increase in production can be achieved through the use of more resources and through the means of using the resources of labor capital and land more efficiently which international trade is also involved in This increase in production is known as economic growth which signifies economic development as well Despite of its negative effects international trade greatly improves the standard of life for people Normally developing countries are exporters of primary products and industrialized countries import primary goods and export secondary or tertiary goods In many developing countries the value of trade to the overall Gross National Product GNP is very high and hence sustained economic development is related to the ability to profitably trade with other nations 1 Many developing
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