Why do countries trade with each other when they both produce similar goods - Essay Example

30 January Why do countries trade with each other when they both produce similar goods?Different countries trade with one another because it is a mutually beneficial business. People, as human beings have the same needs all over the world irrespective of the natural resources their respective countries are enriched with. Although many countries can produce the imported goods within the country, but for that, they have to import raw materials and also arrange the factories and equipments to produce the good, which ultimately proves much costlier than simply importing the prepared good.

Besides, different countries are rich in different kinds of natural resources. For example, Africa is rich in diamonds, and Bangladesh produces jute in abundance. While it incurs Bangladesh very little cost to grow jute, it may cause the USA far too much to produce jute. The different climatic conditions play a decisive role in the kind of crops a country can grow. In addition to that, trade between countries is also very essential for the promotion of international relations. Countries that conduct trade with one another maintain good terms with one another so that they may facilitate trading and strengthen their respective economies.

Trade between countries also has a lot of political significance. As two trading countries foster good relations, they become a united force against a third country that has bad terms with both. “Powerful nations throughout history have used economic sanctions--essentially blocking and prohibiting trade--with other nations in order to punish or force political or behavioral change” (Chase). Trade is very essential for economical strength. Dubai became one of the fastest developing cities in the world in a course of few decades because of trade.

Works Cited:Chase, Marc. “Why Do Countries Trade With Each Other?” 2012. Web. 30 Jan. 2012. .