International trade is the movement of goods and the transfer of services between different countries.
The need for international trade arises because countries have demand for a good or service which they are unable to produce or is able to be produced at a much lower cost in another country, resulting in a lower price.
Generally speaking, international trade is beneficial for consumers as it increases the variety of goods and services available whilst also providing more business opportunities for firms.
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Key terms:
Import – goods and services which are bought from other countries and sold in the domestic market.
Export – goods and services which are produced in the domestic market and sold in other countries.
Comparative advantage – where a country is able to produce a good or service at a lower cost than another country.