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International Political Economy
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Question:
(iii) External Economies:
Author: Angelie BayabanAnswer:
External economies are those which accrue because of the setting up of new industries and expansion of the existing industries. The accruing of external economies lead to the law of increasing returns to scale. It leads to a fall in the cost of production and hence the price level. A fall in the price leads to an increase in demand which is useful for economic development.
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