Internal Economies of Scale
At the firm-level as output increases(triggered by increase in demand from exports), average cost decreases
Sources of Economies of Scale include
Labor Specialization
Managerial Specialization
Efficient Capita
External Economies of Scale
The average cost of the typical firm decreases as the output of the industry within this area increases
Concentration of an industry’s firms in a particular geographic
Larger pools of a specialized type of worker
New knowledge about production technology spreads among firms in the area