International trade is needed so that all countries can avail themselves of the things that they need (and want), and that are not available in their own country. The most common example is oil, which is needed throughout the world, but it is limited to particular areas, and so is traded internationally.
International trade accounts for a huge part of a country's gross domestic product (GDP) and is a vital source of revenue for all countries, particularly those that are developing, though it is the nations that have the strongest international trade, and who have prospered by it, that have become the driving force behind world economy.
It is usually accepted that the benefits of international trade, and therefore, the reasons why it is needed are: It enhances domestic competiveness; it increases sales and profits; it takes advantage of international trade technology; it extends the sales potential of existing products; it maintains cost competiveness in the domestic market; it increases the potential for business expansion; it achieves a global market share; it reduces the dependency on markets that already exist; and it stabilizes seasonal market fluctuations.
International trade is no new phenomena; the Silk Route is a very famous trading route that was used to transport silk and spices in the 14th and 15th centuries. The 18th century saw Clippers, which were ships designed for speed, being used to transport all manner of things from tea from China, and spices from the Dutch East Indies. Sugar, cotton and other goods were also traded internationally to the delight of both those producing them, and those receiving them, but the most sinister trading happened in a much darker period of history: Slaves also became a commodity to be traded internationally; the very negative repercussions of which can still be seen today.
Reasons of foreign trade
There are various reasons for conducting business on an international scale. Trade between countries arise because it is to their mutual advantage. If a country is enjoying a monopoly is the production of a certain commodity, it will have an absolute advantage in the production of that commodity over other countries. The other nations have to import that commodity. International trade arises because some countries have a comparative advantage in the production of some goods over other goods.
Those countries concentrate on the production of those commodities and trade for other goods which they need from other countries. There are countries which are capable of producing raw material. The other nations have no other alternative but to import them. There are many goods which can be produced by sophisticated equipment.
The countries which do not have advance technology are compelled to import such equipments from advanced industrial nations of the world. If a country exports goods to other countries it earns foreign exchange. The country utilizes this foreign exchange to pay the imports of goods and meet its production and development needs.There are many special incentives and privileges which are given by a government to an exporter. These privileges are not available to other traders.
1. Differences in factor endowment
3. Product differentiation
1) Primary effects of natural resources
2) Unequal distribution of resources
3) Difference in Government policies (e.g. Taxes)
4) Supply and demand
5) To increase and better the economy of a country
There is always a need for international trade because the countries have different capabilities and they specialize in producing different things. To compensate for what they do not produce, they have to involve in trade with other countries. For example not all the countries have oil resources, the rest of the countries import oil from the oil producers. Most of the oil producers on the other hand import finished goods because they do not produce enough. Similar example is that of agricultural products.
There's something we don't have, that forgien countries have that, we need for our armys or for our poeple and country.
Yes it is really good for a country to trade with other country so that the may be able to exchange commodities that one was not able to produce locally