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for in the currency of the exporting country or in readily convertible
international currencies, because the value of national currencies

changes all the time.

• Differences in languages, habits and tastes usually leads to a
complex relationship between the host and the home country. This

kind of relationship is unlikely in domestic trade.

• Nationalism – the pursuit of national rather than international interests
– can create barriers to international trade. The movement of goods

and services between borders is typically less free than within
borders.

• Countries have their own objectives and common strategies. Different
national policies on factors such as growth rate, inflation, taxes and
interest rates will affect the cost base of companies and industries
and, therefore, the relative international competitiveness of countries.

The principal aim of national policies is to influence international trade
by blocking imports and encouraging exports.

• Commercial policy is the term used to describe a nation state’s mix of
controls and regulations directed toward international trade. These
include tariff barriers and non-tariff barriers, imposed on foreign

companies to protect the home market and to compensate for the
inability of domestic companies to compete successfully in domestic
and international markets.

3.4 Why do nations trade?

The obvious answer to this is that one nation has or makes what another

needs, so some agreement is made for the one that wants it to obtain it.
However, there are complexities! Differences between domestic and

international trade influence the volume and type of ‘import’ and ‘export’.
There are other influences, such as the scale of technology and the pace
of technological change, innovation, liberalisation and the deregulation of

markets, the competitiveness of marketing structures, political influence,
and the stage the country has reached in its economic development

(Doole and Lowe, 2008). With such a variety of influences it is difficult to