Why do countries trade?
- Countries need to buy in goods that they cannot produce efficiently at home. e.g. The UK imports bananas because it is cheaper than growing them in heated greenhouses
- Countries sell products that they are good at making and have an excess of. They can then use the money they get from selling products to buy products from other countries
- Countries don't only sell products but also services too e.g. the UK sells banking, insurance and computing services to other countries
- The price is increasing for manufactured goods and decreasing for primary goods therefore the gap between rich and poor countries is growing
Reasons for price drop in primary products:
- Crop is over produced
- Decline in demand for product
- Rival sells product cheaper
- Crop failure or mineral used up
Countries that rely on just one product:
- Cuba - sugar
- Ghana - cocoa
- Nigeria - oil
- Zambia - copper
- Bangladesh - jute
