【正文】 o buy these from Japan than to produce them domestically. According to economic theory, Japan should produce and export those items from which it derives a parative advantage. It should also buy and import what it needs from those countries that have a parative advantage in the desired items. Finally, foreign trade takes place because of innovation or style. Even though the United States produces more automobiles than any other country, it still imports large numbers of autos from Germany, Japan and Sweden, primarily because there is a market for them in the United States. For most nations, exports and imports are the most important international activity. When nations export more than they import, they are said to have a favorable balance of trade. When they import more than they export, an unfavorable balance of trade exists. Nations try to maintain a favorable balance of trade, which assures them of the means to buy necessary trade is the exchange of goods and services produced in one country for goods and services produced in another country. There are several reasons for it. The distribution lf natural resources around the world is somewhat haphazard: some nations possess natural deposits in excess of their own requirements while other nations have none. For example, Britain has large reserves of coal but lacks many minerals such as nickel, copper, aluminum etc, whereas the Arab states have vast oil deposits but little else. In the cultivation of natural products climates whereas others, such as citrus fruits, require a Mediterranean climate. Moreover, some nations are unable to produce sufficient of a particular product to satisfy a large home demand, for example, Britain and wheat. These are the reasons why international trade first began. With the development of manufacturing and technology, there arose another incentive for nations to exchange their products. It was found that it made economic sense for a nation to specialize in certain activities and produce those goods for which it had the most advantages, and to exchange those goods for the products of other nations which and advantages in different fields. This trade is based on the principle of parative advantage. The theory of parative advantage, also called the parative cost theory, was developed by David Ricardo, and other economists in the nieenth century. It points out that trade between countries can be profitable for all, even if one of the countries can produce every modity more cheaply. As long as there are minor, relative differences in the efficiency of producing a modity even the poof country can have a parative advantage in producing it. The paradox is best illustrated by this traditional example: the best lawyer in town is also the best typist in town. Since this lawyer cannot afford to give up precious time from legal and typing matters. But the typist’s parative disadvantage is least in typing. Therefore, the typist has a relative parative advantage in typing. This principle is the basis of specialization into trades and occupations. At the same time, plete specialization may never occur even when it is economically adva