Trade Patterns and Development with Russian Trade

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Trade Patterns And Developments Of Russia And European Countries

Reasons Why Europe And Russia Trade With Each Other

Europe and Russia has mutual energy dependence when it comes to the energy commodity. The roots of the energy commodity forms the basis of the European Union having in mind that during the foundation of the European alliance, there were already some treaties existing such as ECSC and EURATOM which were founded by the European alliance. The European Union depends on importing 50% of its energy consumption whereby after 15 years to come, the imports is likely to increase to an approximate 70%. The larger part of its gas and oil importation is from Russia which is one of the reasons why Europe and Russia trade with each other.

The two countries also trade with each other due to the fact that the two countries and geographically located near each other therefore trade within the two countries is considered to be secure unlike if the two countries were far from each other. Moreover, the two countries politically and economically depend on each other which have facilitated the level of trade between the two countries (Paillard, 2010).

Theories of Trade Flow

The Heckscher-Ohlin theory is one of the theories which explain the trade flows between Europe and Russia. This theory states that countries which have plentiful of natural resources will always have a comparative advantage as a result of their products and resources they are using. This theory mainly focuses on two aspects of ...