WHY NATIONS TRADE and factors. Commerce across borders has been going on for thousands of years, but the volume of international business has roughly tripled in the past 30 years. One significant result is economic globalization, the increasing integration and interdependence of national economies around the world.
Six reasons help explain why countries and companies trade internationally:
Focusing on relative strengths
Pursuing economies of scale
Acquiring materials, goods, and services
Keeping up with customers
Keeping up with competitors
These motivations have provided the energy behind the rapid growth in global business, but the level of growth would not have been possible without two key enablers. First, the world’s borders are much more open to trade than they were just a few decades ago, thanks to the advent of international trade organizations and a growing awareness by most governments that healthy trade can help their economies