Introduction

Abstract

Since 1945, many of the fastest growing countries have been heavily involved in world trade. In an increasingly interdependent, competitive world economy, virtually every country or region can become a valuable source of potential wealth for a trade-oriented state. A state’s rapid and successful industrialisation depends on the ability of its corporations to enter two interrelated virtuous cycles, one market oriented and the other resource oriented. Firms must succeed in winning a comparative advantage for their products in large domestic and foreign markets. The larger a firm’s market share, the larger its economies of production scale which in turn enables it to lower prices, improve comparative advantage, and thus win more market share, and so on. Industrialisation also depends on securing cheap and reliable sources of raw materials and energy which are turned into products for the world’s markets. Profits are in part reinvested in securing more raw materials and energy. Thus, the more economically dynamic and wealthy a state, the more dependent it is on trading with every region of the world to sustain and enhance its wealth. Successful trade depends in part on the ability of states to smooth over problems with their trade partners and guarantee continued access to those markets and resources.