Areason that countries trade with each other

Trade between different countries consists of the purchase and sale of goods and services between different countries. In this way, when one country sells something to another, we say that there is an export and when we buy from abroad we will talk about importation.

The main reason that there is international trade is that countries have different resources. This makes some countries able to produce better or cheaper products, so it is logical to specialize in producing those goods and buying from abroad those that a country is not able to produce so cheap.

A reason that countries Trade with each other is Differences in Resources.

Further explanation:

Global trade between countries is the essence of the modern world. Countries differ in resource endowments like different quantity and quality of human capital, different technologies, and different natural resources. Every country does not have the same kind of natural resources because of which the necessity for trade arises. Computers are produced in the US and toys in China because of the difference in resources needed to produce goods. US has such resources that provide the US comparative advantage in computers. Similarly, resources in China provide China a comparative advantage in the production of toys. A country is said to have a comparative advantage in a good that can be produced at the least cost compared to any other country.

Therefore, a reason that countries trade with each other is Differences in Resources.

Learn more:

1.Learn more about protectionist trade policy

2.Learn more about Exchange

3.Learn more about Trade Flows

Answer details:

Grade: Middle School

Subject: Economics

Chapter: International Trade

Keywords: a reason, that, countries, trade, with, each other, international trade, modern world, globalized world, differences in resources, comparative advantage, trade policy, resources, produced at the least cost, natural resources, global trade, countries differ in resource endowments.

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