Why Do Nations Trade?

Why Do Nations Trade?

Nations trade between each other for a few different reasons, the main of which is the fact that one nation has a commodity that another nation does not have ‘š this is a reason to trade. A nation that has high exports has many different commodities that other nations want ‘š examples of these are the European Union, China, Germany and the U.S. Nations with higher imports need the commodities that are supplied by other nations ‘š examples o countries with high imports are the U.S., Germany, and China. Interesting, you might think, that the countries with high imports are the same as those with high exports. Why is this? Because they have much of something, and need much of something else. The U.S. for example, very skilled at manufacturing, exports civilian aircrafts, semiconductors, passenger cars, pharmaceutical preparations, and automotive accessories, and imported crude oil, passenger cars (will discuss later), and medicinal preparations.

Passenger cars, again, very interesting, as they are both imported and exported by the U.S. But you can’t get a Volkswagen in the U.S. without importing it from Germany, and you can’t get a Ford in Europe, without exporting it from the U.S. They might be the same commodity, but because of manufacturing differences, and the fact that brand names are extremely important in cars, the U.S. wants non-U.S. cars, and the world wants U.S. cars as well.

Nations trade because they need to, to have everything that they have. The global market is a global market for a reason, and has been since civilization first started ‘š even in 1200 B.C.E., trading happened between Sumeria and the Harappa and Indus Valley civilizations. The Silk Road was built off of a global market trade, and even ship building first began as a trading method, and navies were created afterwards for protection of trading ships, and then afterwards became part of the various civilizations defenses.