Australia has a medium-sized, open economy that relies on trade with other nations. It specializes in exporting iron ore and has the 12th largest economy in the world. Countries trade because specializing in specific goods and services allows them to produce more than if each tried to fulfill all domestic needs, and trading surpluses results in a higher standard of living for all nations.

2. INTRODUCTION
Australia is a medium, open economy
Economic Growth depends on our trade with other nations
The Australian economy is the 12th largest in the world
Australia is the worlds biggest exporter of Iron Ore

3. WHY DO WE TRADE?
Countries need to specialise in and produce a surplus. The surplus can
then be traded with other nations
Specialisation ensures that we produce more of a good or service than if
we attempted to produce for all of Australia’s collective needs and
wants
Trade results in a higher standard of living

4. REASONS FOR TRADE
Factors of production and factor endowments are unequally distributed
globally due to ;
1. Land differences and climatic conditions
2. Labour cost differentials
3. Capital and technological advancements
4. Enterprise differences due to varying levels of education and training

5. THE SIGNIFICANCE OF TRADE