Global Growth and Trade Patterns

Abstract

As mentioned in Introduction, classical economists constructed different trade theories to explain why countries make trade. They argued that countries make trades due to various reasons under different conditions. They trade because they are different from each other. These differences may be either in real terms such as climates, technology and natural resources, or in monetary variables, such as prices, interest rates and wage rates. Classical economists proved that it does often benefit a nation to exchange desirable things which it cannot produce. Nations may benefit from trading as each of them may produce things it does relatively well.