What is the major reason underlying …

Reasons responsible for the growth of international business :

1. Unequal distribution of resources : Countries cannot produce equally well or cheaply all that they need because of unequal distribution of natural resources among them or differences in their productivity levels. Therefore, some countries have access to produce some products at lower cost that what other nations can do. Hence, the countries find it easy to produce those goods and services in which they have specialization and cost advantage and procuring the rest through trade, with other countries. This lead to emergence of international business.

2. Geographical specialisation : It is because this reason that the trade between two countries takes place e.g. developing countries are labour abundant specialise in producing and exporting garments. Since they lack capital and technology, they import textile machinery from the developed nations which the latter are in a position to produce more efficiently.

3. To avail the benefits of cheap imports : Firms prefer to import those products and services which are available at lower prices in other countries and export the goods to other countries in which they have comparative cost and quality advantage.