Why+Nations+Trade

Why Nations Trade

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International Trade Why do nations trade? This topic can become very complex, but here are a few reasons why countries engage in International Trade.

The Uneven Distribution of Resources Every country has special resources either in their natural resources of its land or the unique skill of its people. For example, central Canada has a good climate and soil for growing wheat. Some parts of Mexico, on the other hand have a climate and land suited for growing fruits and vegetables. The natural resources of Norway include heavy forests, which are cut for timber. The tropical rainforests in Brazil are home to many plants that are used in medicines. Ethiopia, located in Western Africa close to the Equator, has the perfect climate for growing cocoa and coffee beans. Countries in the Middle East such as Iraq and Iran have an abundance of oil underground. Some East Asian countries such as Thailand and China have a workforce of people that work for very low wages.

Greater Variety of Goods and Services Trade allows people in a country to enjoy goods that they might not otherwise have. For example, the United States imports coffee, tea, bananas, sugar, copper and rubber.

Trade Extra Goods Produced A country can begin to specialize in a few products and become very good at producing these products. Trade allows a country to sell the extra goods they produce. For example, Canada sells or trades its extra wheat to other countries in exchange for things it needs, such as fruit.

Needed Resources Acquired One country needs a certain resource found in another country in order to produce goods. An example is the pencil company in Tennessee, USA that needs graphite mined in Sri Lanka to make the lead in their pencils.

Economic Growth and Development A country may benefit from having more places to sell its goods and services. Being able to trade goods and services to other countries opens up opportunities to reach more consumers thus make more money. In our modern economy, companies can find and reach new customers beyond their borders through international trade.