Trade is the exchange of goods and services across different groups.
Trade Theory
It is not cost-efficient to be self-sufficient. A man should not be building their own house while sewing their clothes and contemplating physics. Trade incentivizes specialization which:
- Increases productivity
- Improves standard of living
Types of Trade
Merchandise Trade (Visible Trade)
These are the physical, tangible goods:
- Grown goods,
- Extracted resources
- Manufactured resources That are sold between countries
Non-merchandise trade (Invisible Trade)
Intangible goods. Includes:
- Services
- Tourism
- Investment
- Transfers of funds They are far more difficult to document and measure statistically