Natural resource disparities as a factor in international trade.

 

An explanation of how the contrasts in natural resources between nations can promote trade.

     Everything that derives from nature and may be used or exploited by humans to suit their requirements is referred to as a natural resource.

Natural resources differ in each nation on earth. The reason for international trade is this distinction.

Do you understand how different natural resources in each nation might influence trade?

One of them is that a nation needs to develop international trade in order to meet the demands on its natural resources.

Here's a further explanation:

International trade is fueled by variations in natural resources 

According to Eko Sudarmanto's book Economic Theory: Micro and Macro (2021), various geographical conditions result in various natural resources.

For instance, tropical nations like Indonesia dominate the countries that produce spices. As a result, it is not unexpected that Indonesia is one of the world's major exporters of spices.

Every country in the globe has unique and extremely diverse natural resources due to the differences in their geographic locations.

In his book Business Planning (Business Plan): Applications in the Field of Natural Resources (2020), John E.H.J. FoEh claims that because each country's natural resources are varied, so are the production outcomes.

For instance, Indonesia is renowned for having abundant maritime resources. As a result, Indonesia is able to sell its marine products to nations that lack them, such those in Europe.

International trade is also fueled by each nation's capacity to process its natural resources in addition to its capacity for production.

This means that a country will be encouraged to export raw materials to other nations for processing if it has a lot of natural resources but the infrastructure to handle them.

Illustration : International Trade

As a result, there are two reasons why the availability of natural resources in any nation can influence trade:

1. International trade enables each nation to meet local needs because natural resources vary from one  another.

2. This also promotes international trade because each nation's production outputs and capacity to exploit natural resources vary.

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