Question
How do nations gain from international trade?
Solution
International trade is a type of specialisation or division of labour.
(i) It benefits the world economy if different countries practise specialisation and division of labour in the production of commodities or provision of services.
(ii) Each kind of specialisation can give rise to trade. Thus international trade is based on the principal of comparative advantages and, in principal, should be mutually beneficial to the trading partners.
(iii) In modern times, trade is the basis of the world’s economic organisation and is related to the foreign policy of nations.
