How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Foreign trade plays a significant role in integrating markets across countries. When countries engage in foreign trade, domestic firms face competition from foreign firms. This competition forces firms to become more efficient, innovate, and offer better products at competitive prices. As a result, markets become more integrated as consumers have access to a wider variety of goods and services from different countries. They can choose from both domestic and imported products. Availability of products creates a competition in market leading to close alignment of prices. Also, trade agreements and policies facilitate easier access to foreign markets for goods and services. This access allows firms to sell their products to a broader consumer base beyond their domestic market. As markets become more accessible, they become more integrated economically.

For example, during Diwali season China made lights and bulbs are available in Indian market. During this festive time, buyers have choices when it comes to decorative lights and bulbs. They can opt for Indian-made decorative lights or go for the Chinese-made ones. Both are available in the market at competitive prices.