Question

give several (at least two, though three or four might be better) reasons why countries in a particular region might be more likely to trade with other countries in that same region and briefly explain why. You could consider the country pairs of Germany and France, the united states and Canada, China and Thailand, and United arabs Emirates and Saudi arabia as example ( Though you don’t have to use them, and you could other as example)

Answer 1

The global trade has been here since the centuries as silk from China and spices from India traded in the Europe in the time when there were no airplanes and trains. Still, the trade seems to be flourish in countries with proximity of the border or in the region.

1) Geographical Proximity
One of the important reason to increase trade within the region such EU or ASEAN is the geographical proximity. It means the transportation cost will less and there is no need for heavy investment in logistical as well as supply chain solutions.

2) Cultural Ties
The countries in the same region tend to have close cultural ties. So the consumption of goods and trade pattern is known to both parties which allows trade which mutually beneficial. ASEAN nations have a huge demand for rice and Thailand is the 'rice bowl' of that region so naturally it trades the excess production with neighboring countries.
Malaysia also produces palm oil and India is the largest buyer of palm oil from Malaysia. Although, India is not part of South East Asian countries but it does have cultural ties with Malaysia, Indonesia and Singapore.

3) Cost Advantage
Another factor is cost advantage. China has a huge population with non-existeent labor laws so it is the favorite destination for the manufacturing sector all over the world. However, if such cost advantage is available near the home country then it will obviously encourage the trade.

Mexico is not a developed economy and so US companies find it attractive to set up manufacturing facilities there and benefit from cheaper labor. So Mexico imports raw material and exports finished goods back to the US as well as Canada in the same region. Similarly, Eastern European countries are not heavily industrialized and European companies find it as a good market for their products as well as production hub.