Why do nations trade with each other? (be specific)?

Answer 1

It depends on the national interest. The United States is interested in keeping corporations profitable so it negotiates trade deals that make it easy for them to do business across borders. Other countries may be interested in creating jobs for its citizens and will approach trade deals with the objective to create jobs in the country that would be sustained by exports.

The international economy is fluid and the answer to your question can change from day to day.

Answer 2

Because it is mutually beneficial to both parties. Every country produces some products or services better or more efficiently than another. This could be due to differences in natural resources, geography, population, etc... For example, China has a huge population that is put to good use manufacturing items that would otherwise be cost prohibitive in the US. Meanwhile the US(which has become a service-oriented economy) has the brains/know-how/experience to create/invent these things that are manufactured by the Chinese. While the trade imbalances may seem lopsided at times, over the long run they settle into an equilibrium. Jobs are created on both side and good and services are produced in the most efficient manner.

Answer 3

Theoretically, because of "competitive advantage"! A certain country has a better ability to produce certain product because of its natural resources, culture, level of education and technology.

Imagine a landlocked country (access to the ocean). Lets say, Paraguay. Now, they have no way of getting from their country salt water fish. But they still eat fish and oysters and shrimp. They need to import it to get it. NAtural Resources make PAraguay trade for fish. Meat is one of PAraguay´s major exports.

Sounds like a dumb example, but that is what really happens. Nations specialize in doing what they can do best, and at a cheaper price than other countries. So they trade what they are good at and import what others are good at.

Hand labor rich productos are made in countries where it is cheap. But microprocessors are made in countries with high technological expertise.

Its all a trade off... im good at this, so i´ll make it. If you want some, please do what you are good at and send it to me. Read about competitive advantage. Thats how it is explain in economic theory.

Good luck!

Answer 4

When there's a mutual advantage in doing so. If both can reap a profit, then it's a natural transaction and will take place.

You can make a profit if you can produce something more effectively (cheaply and of higher quality) than the trading partner. So it makes sense to specialize in producing those items in which you have an advantage.

Answer 5

Economic gain. Resources and products are different around the world and some are needed for production of local products.