Trade Theory

Trade theory studies how countries exchange goods and services to benefit their economies. It explains why nations import certain products and export others, highlighting factors like resource availability, production efficiency, and consumer demand. Two key concepts are comparative advantage, where countries specialize in producing what they do best, and gains from trade, which show how all trading parties can become better off. Overall, trade theory helps to understand global economic interactions, the benefits of international commerce, and how policies can impact trade relationships between nations.