TRADE 

OPENNESS

Trade openness refers to the outward or inward orientation of a given country's

economy. Outward orientation refers to economies that take significant advantage
of the opportunities to trade with other countries. Inward orientation refers to
economies that overlook taking or are unable to take advantage of the opportunities
to trade with other countries. Some of the trade policy decisions made by countries
that empower outward or inward orientation are trade

Trade openness is one measure of the extent to which a country is engaged in the
global trading system. Trade openness is usually measured by the ratio between the
sum of exports and imports and gross domestic product (GDP).

Trade openness plays a vital role in an economy, helping to increase its Gross
Domestic Product or GDP by a substantial margin. In turn, it is responsible for
facilitating both growth and economic development which is not limited to just one
nation. With the emergence of newer technology, better means of communication
and enhanced infrastructure, tapping into the potential of international trade has
become easier.

MARX THEORY

Marx believed that people, by nature, are free, creative beings who have the
potential to totally transform the world. But he observed that the modern,
technologically developed world is apparently beyond our full control. Marx
condemned the free market, for instance, as being “anarchic,” or ungoverned.

ECONOMIC OPENNESS

Economic openness, in political economy, the degree to which

nondomestic transactions (imports and exports) take place and affect the size and
growth of a national economy. The degree of openness is measured by the actual
size of registered imports and exports within a national economy, also known as
the Impex rate. This measure is presently used by most political economists in
empirically analyzing the impact and consequences of trading on the social and
economic situation of a country.
Economic openness is a strategy by which countries eliminate or substantially
reduce their barriers to international trade and foreign investment. In other words,
the objective of economic openness is to reduce obstacles to the exchange of
goods, services and capital between different countries

HOW TRADE OPENNESS IS CALCULATED

Trade openness is measured as the sum of a country's exports and imports as a

share of that country's GDP (in %).

Trade openness is calculated using the following equation:

EFFECT OF TRADE OPENNESS

1. Trade openness brings about a fundamental change in the quality of labour and
capital in trading countries.

2.  It provides a foundation for international growth.

Companies that are involved in exporting can achieve levels of growth that may
not be possible if they only focus on their domestic markets. This allows brands
and businesses an opportunity to achieve sustained revenues from a diversified
portfolio of customers in several markets instead of a limited customer base in a
single home market.

3. Trade Openness improves financial performance.

Brands and businesses which assert themselves in foreign trade work can increase
their financial performance. This allows them to augment the returns they achieve
on their investments into research and development. By rotating the products or
services through the global market, the commercial lifespan of each opportunity
can be amplified, expanding what existing products and services can provide. This
benefit can even be achieved if a domestic market is no longer interested.
3. Trade openness encourages market competitiveness.

When a brand and business compete in several markets simultaneously, then it

must focus on its competitiveness for it to be able to thrive. By observing a larger
range of trends because of their greater level of global market access, brands and
businesses can focus on quality, design, and product development improvements
so that they can continuously improve and diversify.