While early trade between West and Tropicana was limited to the exchange of goods, soon West learned that some of the products it produced could be produced more cheaply in Tropicana. Western producers transferred the knowledge of how to manufacture some of its products to producers in Tropicana, calling this a transfer of technology. Later Western producers actually established their own West owned plant in Tropicana to manufacture various products, what they referred to as foreign direct investment. Sometimes the Western producer owned the entire Tropicana entity, but at other times it jointly owned the entity.
The Tropicanos were also becoming concerned that as the decades passed many Western companies had bought not only goods from Tropicana, but the entire companies which produced those goods. Tropicanos were not sure that this should be allowed. They were also concerned that although the quality of life in Tropicana had improved, in West it had increased even more rapidly, and that the disparity of income which was only modest when the societies began to trade, was now very great. Only two decades ago a garment from West cost only one barrel of wine, but now it cost two. And this was particularly true of the natural resources of Tropicana. Their price had deteriorated compared to the price for finished products from West. West was now a manufacturing nation, while Tropicana was still an agricultural community with much production of natural resources by Westerns owned firms.
Tropicanos officials were not sure that the idea of trading on the basis of comparative advantage was working. They thought that free trade had caused them considerable harm because the industries of West had started out more efficient. Tropicana had limited free trade to protect infant industries, as had West for national security. Both nations occasionally used tariffs and quotas, and more recently they found other ways which seemed to reduce trade. Often containers had to meet certain regulations. Labels had to be in the importing society's language and goods had to be tested locally; only certain small ports could be used for the entry of designated goods; the governments of each society were subsidizing production of certain products on the one hand, and adopting Buy West or Tropicana rules on the other; permits were required to import, but they were difficult to obtain. Both nations had become protectionist in different degrees.
But there was cultural, educational and scientific cooperation between the two societies. One cooperative project was to explore the uncharted areas east of West. To their amazement they discovered the third society - Aglaia. It was a strange society to them. It did have a temperate climate as in West, and considerable resources. And it had much gold. But it had not advanced very much in the time that West and Tropicana had been trading with each other. When West and Tropicana traders began to talk to several Aglaians about the goods made in West and Tropicana, they were told that all trade would have to be negotiated through a central society or State Trade Organization (STO). Everything seemed to be centrally planned in Agalia. The government decided how many boats to produce, as well as how many pairs of shoes. The market-forces of supply and demand- played little role. Often there were shortages of certain products, while others were overproduced. Agalia was determined to be an industrial nation, and it diverted much of the resources of the nation to that end. It was not satisfied with being an agricultural nation.
