‘‘In modern times international trade is the basis of the world economy.’’ Support the statement with examples.

International trade is the result of specialisation in production. It benefits the world economy if International Trade 83 different countries practise specialisation and division of labour in the production of commodities or provision of services. Each kind of specialisation can give rise to trade. Thus, international trade is based on the principle of comparative advantage, complimentarity and transferability of goods and services and in principle, should be mutually beneficial to the trading partners. In modern times, trade is the basis of the world’s economic organisation and is related to the foreign policy of nations. With welldeveloped transportation and communication systems, no country is willing to forego the benefits derived from participation in international trade.