Reasons for International Trade
The reasons for international trade would include the following points:
- Production- It is not possible for every country to produce at an equal cost and because of this international trade takes place.
- Factors of Production- It includes labor, capital as well as raw materials for the production of goods that are available at various levels in different countries.
- Cost of Production- Countries prefer those countries in which production can take place at a lower cost.
- Resource Distribution- There is always the limitation of resource distribution and there is unequal distribution of resources in the country. Examples include jute products of Bengal, food products from Punjab, Kerala for spices, and so forth.
International Trade
International trade refers to the exchange or trade of goods and services occurring between countries and influences the world economy. Some of the most commonly traded commodities include clothes, machinery, raw material, and so forth. The volume of international trade has increased manyfold and covers different domains which include travel and tourism, banking, communication, advertising, and so forth. There has been an increase in foreign investment as well as the production of goods and services at the international level.
International Trade