Question
Distinguish between foreign trade and foreign investment.
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Answer
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BASIS FOR COMPARISON
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FOREIGN TRADE
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FOREIGN INVESTMENT
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Meaning
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Foreign trade implies the trade of goods, services and capital between two countries of the world.
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Foreign investment refers to an investment made in a company from a source outside the country.
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Need
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Resource endowment
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Capital requirement
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Result
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Integration of markets of different countries.
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Additional investment in the form of capital, technology and other resources.
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Advantage
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It creates an opportunity for the producers to cover the international markets.
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It brings long-term capital to the company.
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Objective
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To earn profit and excel global market.
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To generate returns in long term.
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