The reasons why nations trade

Trade refers to the process of buying and selling goods and services to the customers in the domestic and the international markets .The trading process involves parties that are interested in the other countries goods and services. Trade that involves two people is known as bilateral trade while trade that involves more than two parties it’s known as the multilateral trade.

Money is used as a means of exchanging the goods ands services amongst the persons that require them. There are different types of money that enhance the carrying out of the transactions they are known as credit money, paper money and the non-physical money. These kinds of money facilitate, promote and simplify the process of carrying out trade with the other countries of the world.

The reasons why countries engage themselves in the trading business are that: they may require the products that they don’t locally produce in their country. In other instances the climatic conditions within their country may not be conducive to grow the different kinds of products that are of importance to them. Trade may also be carried out when the governments of various countries may find it expensive to produce a good or service within their country hence they may opt to import the goods and services from other countries in the world.

The other reason why people may trade with the other countries of the world is that of the political instability within the resident coutries.The countries that are unstable are in most cases don’t get the opportunity to carry out their businesses effectively due to factors such as fear of attacks from the invaders and the terrorists thus the government of those countries may have no other option, but to import the goods and services that they require and other times some groups of people may political pressure the government to import some goods and services for their own interests .It is therefore important to trade with other countries so as to obtain the goods and services that the countries deserve in order to meet the demands of the people in their countries .

References

• What is trade? Website accessed on 25th August, 2008
• David Miller, (2004) “Comparative Economic Systems”