Trade

Trade is the exchange of goods or services among two or more parties. In its original form trade had to be negotiated through barter and the exchange of goods and services of a recognized equal value that was wanted by both parties. Modern trade is generally negotiated through the use of a medium of exchange, i.e. money, and rarely through barter: as a result one can separate buying and earning or selling. The invention of money greatly simplified and promoted the development of trade.

Most economists accept the non-obvious theory that trade is beneficial for both parties, and reject the notion that all exchange must exploit one party. Trade exists largely because there are differences in the cost at which something can be produced in different locations. As such, exchange at market prices between locations benefits both.

Empirical evidence for the success of trade can be seen when contrasting countries such as South Korea, which has adopted largely unfettered free-trade, whilst India has pursued a more protectionist policy. Countries such as South Korea have faired much better than India, and others, over the past fifty years.

History

See also: International trade, List of international trade topics, Trade bloc, Business, Retail, Arms trade.



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