International Trade

Abstract

Countries engage in international trade for many reasons. Sometimes the main reason is political rather than economic. Sometimes certain countries are the only suppliers of particular goods. Most of the world’s coffee is grown in Brazil, Chile is the world’s main supplier of nitrates; and so on. However, with modern technology, many countries are capable of producing the same goods and yet they choose to obtain goods they could produce themselves from abroad. Economists have traditionally explained this in terms of the gains from specialisation. In other words, countries specialise in the production of those goods where they are most efficient.