Samuelson's Paradox

Samuelson's Paradox is a situation in international trade theory where, contrary to expectations, increasing a country's exports can lead to a decline in its overall welfare or national income. This happens because while exports boost certain sectors, they can cause resource reallocation that harms other areas or lead to adverse effects like higher prices or reduced consumption domestically. Essentially, it demonstrates that trade benefits are not always straightforward and that expanding exports doesn’t automatically ensure economic improvement, highlighting the complex and sometimes counterintuitive nature of international economics.