Which of the following are the main bases of international trade?
(A) Differences in national resources.
(B) Direction of trade.
(C) Differences in stages of economic development.
(D) Extent of foreign investment.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (C) and (D) only
Countries trade because they differ in what they have and what they can make.
(A) Differences in national resources. — Correct. Resources are spread unevenly because of differences in geology, relief, soil and climate. Each country sells what it has in plenty and buys what it lacks.
(B) Direction of trade. — Incorrect. Direction of trade means the countries with which a country trades. It shows the pattern of trade; it is not a reason for trade.
(C) Differences in stages of economic development. — Correct. Farming countries exchange farm products for manufactured goods, while industrial countries export machinery and import food grains and raw materials.
(D) Extent of foreign investment. — Correct. Rich countries invest in mining, oil drilling and plantations in developing countries. They get food and minerals back and new markets for their goods, so trade grows.
NCERT (2026-27): “Basis of International Trade … (i) 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.” “(iii) 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.” “(iv) Extent of foreign investment: Foreign investment can boost trade in developing countries which lack in capital required for the development of mining, oil drilling, heavy engineering, lumbering and plantation agriculture.” |