Factors determining market size

The market size that an economy can have access to is very important in terms of determining the GDP size and its potential growth. There are several factors that could determine the market size that an economy can access to.

Firstly, the market size is partially contributed by historical heritage. When a country has a large land and a large population, such country definitely has an economy that has the access to a large market. As the population and the land pre-determine the size of the domestic market. In the past, some countries used to use wars as their tools to expand their domestic markets, including expanding their colonies; however, in modern eras, wars are forbidden and unpopular. starting wars usually make a country face sanctions from the world community, so the size of the domestic market is pre-determined by historical factors.

Secondly, the market size is partially determined by a country's diplomacy. If a country can have a clear and effective diplomatic strategy, it can allow the country to negotiate with other countries to seek for advantageous trade deals. When more advantageous trade deals are made, the country does not only have access to more foreign markets but also has lower costs to have access to overseas markets.

Thirdly, the market size is also determined by the size of the own domestic market. When a country has a very large domestic market, other economies are also willing to have access to this market. Trading is not a one-side activity when one side starts to trade with the other side, both sides will eventually trade with each other, as during trading they are more likely to find mutual interests.