Reasons for international trade:

1. Different countries are endowed with different factors:

• Different countries are endowed or say blessed with different factors of production in different proportions.
• All the countries do not have all the necessary factors of production to meet their demands. Hence, the countries trade with other.countries for resources, factors of production and technology to fulfill their requirements.

2. Cost of production:

• Since the factors of production and resources are distributed unequally in the world, the cost of production of goods and services also varies in different countries.
• For example, if a factor of production is scarce in a country, the cost of production for some goods or services may be more. In such situation the country will procure those goods from other countries.

3. Technological progress:

• All countries do not achieve the same level of technological progress. Some countries have expertise in some type of technology while others possess greater ability in another type of technology.
• The difference in technologies becomes a reason for entering into international trade for purchasing or selling goods or services that require specific technological expertise.

4. Division of labour and specialization:

• Availability of labour, their productivity and skills varies from country to country. Moreover, entrepreneurial skills and efficiency also varies from person to person.
• So, some countries will have better man-management and production skills Where as some may have lesser.
• This difference wiH give rise to trade between countries for producing and selling goods and services.
• The country whose labour has lesser skills will purchase goods/services from countries which possess specialization.