Trade is the buying and selling of goods, services, or financial products between individuals or companies (including countries) to fulfill needs and achieve gains. It can be domestic or international, and it can occur in physical markets or on internet platforms, depending on rules and trade policies.
Trade facilitates specialization and the division of labor, allowing regions to focus on producing products where they have an advantage and exchange them with other regions for goods they cannot produce as efficiently. It also allows consumers to access a wider variety of low-cost products, improving their quality of life.
For nations, trade can help them earn foreign income, enabling them to maintain their status-quo in the global economy. For example, if a country is much more productive in producing shoes than clothing, it can export these products and import clothes, earning a large sum of money in the process.
The benefits of trade are not limited to economic growth and poverty reduction, however. It also helps to develop relationships between governments and fosters friendship and trust.
Despite the obvious benefits of trade, it is not without its critics. For example, if American shoemakers are unable to compete with the low-cost imported footwear they sell abroad, politicians might argue that the government should protect the industry by giving tax breaks for domestic production or adding extra duties on imported goods in an attempt to keep jobs in America and preserve a time-honored craft.