Reasons why countries trade with each otherTrade is the act or process of selling, purchasing or exchanging goods or services, whether at retail or wholesale, within a country or between different countries: foreign trade; internal trade. Trade between countries takes place because resources are unevenly distributed across the world and the movement of factors of production is limited. Some countries are consistently better at producing certain goods than others. Main reasons • Different factor endowments – some countries are rich in natural resources while other countries have relatively few. Trade allows countries to export certain resources and make a profit to pay for imports of other products. • Increased welfare – trade allows countries to achieve a higher level of consumption than they would domestically. • Economic scale – to gain economic scale, countries trade with each other. each other. With trade and production on a scale larger than what is possible nationally, a country may be able to achieve greater economic scale. • Diversity of choice – commerce gives us access to products and services that we might not be able to create ourselves. important to the UK as it is a key part of economic growth and development. This will provide the UK with resources it does not have and enable large-scale production. For example, coffee in England. Usually, England does not have coffee fields, due to its cold climate, but with the help of trade facilities, it can import coffee from Brazil. Let's take another example: the UK might have good steel ores, and they have so many that if they don't need them, they can export them. This is a bit of a complicated question, but the bottom line is to meet the needs of a medium of paper for trade between participating countries. The most popular trade bloc is NAFTA, between Canada, Mexico, the United Kingdom and North America. Benefits of the trade bloc for the UK: Foreign direct investment – ​​it attracts foreign direct investment, leading to economic benefits for participating countries. this helps the country build a huge market which ultimately offers low manufacturing cost. Economies of scale – expansion of a huge market offers the benefits of economies of scale where the average normal cost of production is decreased and piggyback production can be accessible. – this gives producers from different countries the opportunity to come together and develop fierce competition between them. Trade effects – the trade bloc removes customs duties, which again reduces the cost of importing goods and services from different countries..