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    International trade taking place between similar developed economies

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    Why does most of the worlds' international trade take place between similar developed economies?

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    One of the major reasons that international trade may take place is the existence of economies of scale (also called increasing returns to scale) in production. Economies of scale means that production at a larger scale (more output) can be achieved at a lower cost (i.e. with economies or savings). When production ...

    Solution Summary

    The expert determines why most of the worlds' international trade takes place between similar developed economies.