THE REASONS WHY COUNTRIES TRADE: THE BENEFITS AND DISADVANTAGES TRADE RELATIONSHIP BETWEEN KENYA AND CHINA: REASONS WHY THE TWO COUNTRIES TRADE
Table of content
1.0 International trade
1.1 Reasons why countries trade
1.2 Benefits of trade
1.3 Disadvantages of trade
2.0 Trade relations between Kenya and China
2.1 Volume of trade between kenya and
2.2Reasons for the Trade relations between Kenya and China
1.0 International Trade
International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP).Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. Trade among nations is thus essential for countries to obtain goods and services not available within their own borders either because resources are not indigenous or production technology is lacking. Trade also can serve as an important act of diplomacy between cooperating nations looking to support and be supported by one another or as a weapon of war to punish or harm countries with divergent agendas. 1.1 The reasons why countries trade include;
Haves and Have Nots
In some cases, trade is essential for a country to obtain a product or resource not available within its sovereign territory. Middle Eastern countries, for example, have vast natural petroleum resources. Much of the world depends on trade with these oil-rich countries for fuel. The need for rare resources held by only a few nations has led to war throughout the course of world history when trade talks have broken down. 2.
Keeping the Peace
Some nations trade amongst themselves as a means of fostering good relations, not just to obtain imports or sell exports. In one form of ancient trade, some countries or tribes would pay tributes of gold or other goods in order to pass through foreign borders for purposes of further trade or travel. A healthy trade treaty is one of the first signs of positive relations between nations. 3.
Some countries trade with other nations for particular goods and services because they either lack the technology to produce the goods themselves or the other countries can do it cheaper. One country may be very good, for example, at producing high quality cabinets and entertainment stands for large screen televisions. Another country may have dialed in to the most efficient means of producing high definition televisions that fit on the stands. It would benefit both countries to trade with one another for their different but complementary goods and services. 4.
Trade as a Weapon
Trade, or lack thereof, also can be used as a weapon to do harm to competing or belligerent countries. Powerful nations throughout history have used economic sanctions (essentially blocking and prohibiting trade) with other nations in order to punish or force political or behavioral change. Countries also often enter into strong trade agreements with the enemies of their enemies, such as trading weapons or nuclear arms to one nation that may be used against another. The United States has used economic sanctions on numerous occasions to cease trade with nations suspected of supporting terrorism. Economic sanctions can be slow to work or ineffective, however, if enough other nations are not on board with the country trying to dole out the punishment. 5.
Unification of Trade
Trade also can serve as the great unifier. Neighboring nation-states with shared borders and similar economic goals and endeavors can create common currencies and trade rules and regulations in order to further the agendas of all participants. In Europe in 2002, for...
Please join StudyMode to read the full document