International trade is the result of specialisation in production. It benefits the world economy if different countries practise specialisation and division of labour in the production of commodities or provision of services. Each kind of specialisation can give rise to trade. Thus, international trade is based on the principle of comparative advantage, complementarity and transferability of goods and services and in principle, should be mutually beneficial to the trading partners.

Which of the following is/are NOT the basis for international trade ?

None of the above

The correct answer is Option 4: None of the above

All the above given factors form the basis of international trade as no country is self-sufficient due to difference in natural resources and there is interdependence among the nations for exchange and fulfilment of resources for which they need good system of transportation and foreign investment.

Difference in national resources: The world’s national resources are unevenly distributed because of differences in their physical make up i.e. geology, relief soil and climate.

Stage of economic development: At different stages of economic development of countries, the nature of items traded undergo changes. In agriculturally important countries, agro products are exchanged for manufactured goods whereas industrialised nations export machinery and finished products and import food grains and other raw materials.

Transport: In olden times, lack of adequate and efficient means of transport restricted trade to local areas. Only high value items, e.g. gems, silk and spices were traded over long distances. With expansions of rail, ocean and air transport, better means of refrigeration and preservation, trade has experienced spatial expansion.