Trade is a system of buying and selling goods and services. The term is most often applied to international trade, in which businesses from different countries sell their products and services in other nations.
Trade has been part of human society since the development of the first civilizations around 2000 bce. People in these early societies would exchange raw materials like food, wool and flint for other goods and services from those in the same group or tribe. Later as the world became more interconnected, people would trade over long distances using paths and routes across land and sea.
Economists have identified a number of advantages to trade. For buyers/consumers, it provides access to a wider range of products at lower prices. For sellers/businesses, it provides a source of income that helps them grow their business. Trade also benefits the economy as a whole by helping it develop and become more diverse.
There are some disadvantages to trade though. For example, if a country allows too much foreign trade, it can hurt local companies and reduce employment opportunities. This is why some economists have argued for tariffs or other trade barriers to protect infant industries that cannot yet compete on the global market.
There are two main theories on how to trade. One, known as free trade, advocates no restrictions on trade, believing that supply and demand forces operating at a global scale will ensure production happens efficiently. The other, called protectionism, believes that regulation of international trade is important and aims to guide markets accordingly.
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