Introduction In 1776 Adam Smith stated, "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." Exports. Absolute Advantage. Before we go down that road, it is important to understand the fundamental reason why countries trade. Goods and services going out of a country. Why do countries trade with each other? When a country imports more then it exports. Trade between developed and developing countries. The five basic reasons why trade may take place are summarized below. Each country has a different allocation of natural and human resources. Imports. To raise the standard of living. Goods and services going into a country. International trade is the exchange of goods and services between two (or more) countries. Why does a country need to trade with other countries? When goods (services) are brought in, it is called import and when goods are carried out its called export. And yet, while trade might be the gateway to development, the statistics in Africa aren’t too impressive, especially when it comes to one of the biggest opportunities for growth: trade among African countries. Difficult problems frequently arise out of trade between developed and developing countries. Why do countries trade with each other?Show, using examples, why this may be to do with principle of comparative advantage. There are the key reason why countries trade with each other. Are there any disadvantages for international trade? Since no country can produce or manufacture all the things that it needs, there is always the need for countries to trade with other countries that have what they need. When the first civilizations did begin trading with each other about five thousand years ago, however, many of them got rich…and fast. Trade Deficit. Why do nations trade with each other? International trade has existed since time immemorial and will keep on existing simply because the world cannot do without it. In 2014 in Europe, for example, 69% of exports were to other countries on the continent. Most less-developed countries have agriculture-based economies, and many are tropical, causing them to rely heavily upon the proceeds from export of one or two crops, such as coffee, cacao, or sugar. A given country will be well suited to the production of some goods (or the provision of certain services) and totally unsuited to the production of others. Trade among nations is taken as a sign of good intention and a means of preserving non-hostile diplomatic relations. REASONS TO ENGAGED INTERNATIONALBUSINESS All organizations, irrespective of their size, are keen toenter in to international business. 1. 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