International Business

International Business

Why nations trade

The sale of goods and service is not restricted to local, reginal, or national market; it often take place on an international basis. National import goods that they lack or can not produce as efficiently as other nation, and they export goods that they produce more efficiently. This exchange of goods and service in the world, or global, market is known as international trade. There are three main benefit to be gained from this type of exchange.
First, international trade make scarce goods available to nation that need or desire them. When nation lack the resource needed to produce goods domestically, it may import them from another country. For example, Saudi Arabia imports automobile; the United States; and Mexico, computers.
Second, international trade allows a nation to specialize in production of those goods for which it is particularly suited. This often results in increased output, descreased costs, and a higher national standard of living. Natural, human , and technical resource help ditermine which products a nation will specialize in.
The third benefit of international trade is its political effects. Nations that trads together develop common interests that may help them overcome political difference. Economic cooperation has been the foundation for many political alliance, such as the European Community (EC), founded in 1957.
International trade has done much to improve global conditions.