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International trading is vital in overcoming the problems of limited natural resource production opportunities. Moreover, countries trade with each other to get a higher income due to the difference in the cost of production in the home country and abroad. Another aim of international trading is to increase the specialization of production, which enhances the general volume of the products. The countries also can emerge into international trading striving to regulate political relationships. B) The example of export and import can be explained through the trading relationship between India and UAE. Most of India’s demand for crude oil is satisfied by the import. The majority of such essential resource imports are correlated with UAE’s supplies. Similarly, India exports agricultural and clothing products to UAE. If these countries reject international trading, difficulties in acquiring the necessary resources will appear. The expenditures on production will be also significantly increased.
Emerging into international trading is beneficial for the countries from the perspective of the neoclassical international trade theory. It focuses on discussing the equalization of the prices and production factors for exporting and importing units (Jeyarajah, 2019). Acquiring goods with more expensive production factors in the home county through international trading is valuable. Due to the equalization of both types of expenditures and evolving the free-trade rules, the mentioned theory proved the profitable conditions for international trading (Jeyarajah, 2019). B) The perfect example of an exporter country is Japan and its auto production. The country exports such products because of the lack of natural resources, especially minerals. Emerging into international trading allows the country to import resources that cannot be gained within the homeland.
Reference
Jeyarajah, S. (2019). A survey of the evolution of international trade theories. IOSR Journal of Economics and Finance, 10(6), 66–70.
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