How Google Calculates A Site's Page Rank ?
Google acts as a voting system. If we place a link to someone's web site on one of our web pages, then it means we are voting for that site. If our site is important enough to have other site's voting for it, (meaning that they've placed a link to my site on their pages), our link to you will help raise your page ranking. However, if our site is NOT important in the eyes of the Google-bots because the sites that link to us do not have a page rank of at least 4 of 10, well then, our link isn't going to do much good at all. In fact, sites with a page rank lower than 4 of 10 won't count as an incoming link at all. Google will only consider a link pointing to your site, if the site that's pointing to you has a page rank of at least 4 of 10. It means that Google is trying to provide quality content sites with more exposure and by using their page ranking system, only the sites with relevant, quality content will be considered in both the search results and the link exchange calculations. So,
Who Should We Exchange Links With?
As in anything else we do, we should link to sites that we truly believe offer useful content to our site's visitors. The Page Ranking System that Google has in place makes it useless to inadvertently add links to other sites for the sole purpose of 'trading links'. The reality of the situation is, if you are trading links with other sites for the sole purpose of raising your own search engine optimization then you should only trade with sites that have a page rank of 4 of 10 or higher. Take caution, that if the pages you link to are not in some way related to the content of your own site, you'll NOT get the full advantage of their page rank.
The Bottom Line
If the pages that you link to off your web pages are not relevant to your own content, they will not help you in any way to receive a better ranking on Google. If you link to pages that are not already considered important to Google due to their own content and their own ranking, they won't help you much at all. The bottom line? Don't link to someone just because they'll link to you. This will NOT help your ranking. Link to other sites because they have quality content that directly relates to the content of your site in some way. Think of it this way; link to sites that will offer your visitors relevant information to what they came to your site for. Actually visit the sites you link to and make sure that they offer quality content instead of 'fluff'. Remember that Google's main purpose is to provide relevant search results to the people that use the Google Search Services. To keep their users happy, they only want to send them to sites that are considered important not only because of the content they provide, but because they are considered important enough by related sites to actually provide a link to them as a resource. While Google is not the ONLY search engine optimization there, it is the most widely used 'provider' of search results. Many of the 'major' search engines get their results directly from Google! A strong page rank and high ranking in Google can mean free search engine optimization from other search engines that normally only accept 'paid inclusions'.
One Last Note
Some web masters refuse to exchange relevant links due to a page rank of less than 4 of 10. This may bite you later, if the site that wants to link to you now, ranks higher later. Don't refuse a link exchange solely due to their lacking page rank. If a site has quality content, and it's relevant to your site, exchange links with them anyway. Just because they don't have a high page rank today, doesn't mean they won't soon be considered important in the eyes of the Google-bots. Keep your link exchanges relevant, and make sure the content of the sites you link to is good, solid information. Soon enough, you'll find these quality sites wanting to link to you too. Remember, content really is the most important thing... they don't call it the 'information super highway' for nothing you know!