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End of Unit Summary
The purpose of this unit was to investigate the benefits of international
trade for the world economy. International trade is defined as the
purchase, sale or exchange of goods and services across national
borders, and it is one of the ways that countries connect economically.
Despite arguments in the literature, many authors agree that free trade is
preferred because it opens opportunities to an individual and a company
to exchange goods and services. The International Trade Measure
examines the volume of an economy’s trade relative to total output. This
unit looks at the differences between international and domestic trade,
considering differences such as culture, immigration barriers, capital,
labour and national currencies. Nationalism causes the pursuit of national
rather than global interests, which can create barriers to international
trade. National commercial policy is the term used to describe a nation-
state’s mix of controls and regulations directed towards international trade.
The unit answers the questions of why trade takes place and why
countries import and export the type of goods and services they do. It
examines the classical, neoclassical and modern theories of international
trade. Such a theory needs to answer three basic questions: Why do
countries export and import certain goods? On what terms do countries
exchange goods? What are the gains from international trade?
