Discuss as to why nations trade.
1. Geographical specialisation has forced the businessmen to trade with other states in the same nation or even with other countries.
2. Most states or regions within a country tend to specialise in the production of goods and services for which they are best suited, e.g. in our country, India, West Bengal is known for jute products whereas Mumbai in Maharashtra is known for cotton textiles.
3. This kind of specialistation makes it inevitable for the producers of goods and services to interact with each other to take the benefits of geographical specialisation and division of labour.
4. The producer having abundant labour can purchase capital and technology from others at reasonable rates, thereby can come in a position to produce efficiently. Hence, it is beneficial for nations to trade with different regions in the same country or with different nations.
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