Does trade lead to industrialization?

Question

I need facts to prove that trade does lead to industrialization, so can you please give me some helpful links? Thanks!!

Answer 1

NC is right - trade does not lead to industrialization. But industrialization does lead to trade, for a number of reasons:

1. To the extent that industrialization lets a society produce more goods and services with the same population, on average, members of the society are richer and can afford to import more.

2. At the same time, being able to produce more means that they now have relative advantage in more goods and services, and can therefore export more as well.

This is the beneficial cycle that makes improvements in productivity a win all around (except for the environment).

It also works the other way - a decrease in productivity tends to be a lose all the around.

Answer 2

Not necessarily.  Trade leads to specialization; countries export what they have comparative advantage in and import what they have comparative disadvantage in.  So it's entirely possible for a trading nation to have an "overdeveloped" agriculture or service sector and an "underdeveloped" manufacturing.