International Trade


Reasons why countries trade with each other

Obtaining goods that can't be produced domestically

  • Because they lack the natural resources that enable such production

Obtaining goods that can be bought more cheaply from overseas

  • Countries producing goods more efficiently than others

Selling off unwanted commodities

  • Having so much of a resource they couldn't use it all themselves
1 of 3


Lower Prices and Increased choice for consumers

Lower Input Prices

  • By international trade, countries can obtain essential inputs at a lower cost

Wider Markets for Business

  • If countries are free to specialise and trade, firms will be selling to larger markets
2 of 3


Competition for domestic businesses

  • If imports are good in quality and better priced, domestic producers will struggle


  • When domestic industries are threatened, threat of employment
  • If a country is too dependent on a narrow range of goods, demand patterns can cause it to suffer
3 of 3


No comments have yet been made

Similar Economics resources:

See all Economics resources »See all International Trade resources »