Explanation :
If the trade takes place crossing the borders of a country between two or more countries , then it is called external trade. A country has to import the goods and services which are not available within the country and can export it's surplus goods and services to other countries. This process helps them fulfill each other's demands as well as earn foreign currency. Nations trade with each other due to the following reasons :
- Proper use and mobilization of available means and resources.
- To make available of consumable goods even if not produced in the country.
- Promotion of national such as handicrafts , garments , art and culture etc
- Creation of employment opportunities at local and national level
- Rapid growth of economy and technology.
- Earning of foreign currency and increase in the per capita income.
- Development of mutual relationship with other counties.
- Exploration of new areas for investment.
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