How can one explain in a few words why equity trading is an active contribution to the development and growth of economy?
At first sight it seems counter-intuitive (for the layman): Buying newly issued shares of a company gives the company money which it can spend in research and development of new products or more efficient ways of production. Trading with shares later is not for the immediate benefit of the company anymore.
But why should one buy newly issued shares? Firstly because of the dividends one expects. But that's not all: Also because one hopes that one can sell them later for a higher price. This prospect is it that lets one give money to the company. If there was no equity trading, people would not buy shares, and companies would not get money.
Is this kind of reasoning too naive? Do I give meaningless answers to a meaningless question?