Knowledge spillover refers to the exchange of ideas among individuals that can stimulate innovation. For example, one company's innovation may spur related inventions by other companies as ideas spread. Knowledge spillovers are a non-rival cost that benefits parties not directly involved in an innovation. External economies of scale occur when an industry as a whole benefits from infrastructure improvements, like a better transportation network lowering production costs for all companies located near it. International trade involves the exchange of goods, services, and capital across borders and is important for specialization and innovation in a global economy.
2. What is a Spillover?
A spillover is a situation or feeling that starts in one place but then
begins to happen or have an effect somewhere else.
Knowledge spillover is an exchange of ideas among individuals.In
knowledge management economics, knowledge spillovers are non -rival
knowledge market costs incurred by a party not agreeing to assume
the costs that has a spillover effect of stimulating technological
improvements in a neighbor through one's own innovation.
Example of Knowledge spillover:
Innovation depends on the exchange of ideas among individuals,
which economists call knowledge spillovers. For example, a given
company's innovation may stimulate a flood of related inventions and
technical improvements by other companies.
3. What are the External
Economies?
External economies of scale occur outside of an individual
company but within the same industry. Remember that in
economics, economies of scale mean that the more units a
business produces, the less it costs to produce each unit.
External economies of scale describe similar conditions, only
for an entire industry instead of a company. For example, if a
city creates a better transportation network to service a
particular industry, then all companies in that industry will
benefit from the new transportation network, and experience
decreased production costs.
For example: A firm may benefit from external economies of
scale if it is located in an area with well-developed
infrastructure, such as roads, ports, and airports, which can
reduce the cost of transportation and logistics.
4. What is International
trade?
International trade is the exchange of capital, goods, and services
across international borders or territories because there is a need or
want of goods or services. In most countries, such trade represents a
significant share of gross domestic product.
Trade is essential for keeping a competitive global economy and
lowers the prices of goods internationally as it spurs innovation and
encourages markets to become specialised.
For example: Among the items commonly traded are consumer goods,
such as television sets and clothing; capital goods, such as
machinery; and raw materials and food. Other transactions involve
services, such as travel services and payments for foreign patents
