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Diversification helps countries to hedge against adverse terms of trade shocks by stabilizing export revenues. It enables them to direct positive terms of trade shocks into growth, knowledge spillovers and increasing returns to scale.
Foreign trade plays a very important role in the economic development of a country. It promotes economic development by improving competitive capacity, expanding market, and providing modern technology and machineries for industrial and agricultural sector.
It is very important to start trade diversification in nepal because it help nepal to earn foreign currency , it help in the marketing sector , in industrial sector etc.
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