Fisheries Economics

6.3.1. International Trade and Exchange - Introduction

6.3.1. International trade and exchange

Trade existed since time immemorial, in one way or the other. Trade facilitated not only exchange of goods but also led to the spread of language, art culture, customs, race, goods and services. It catalysed socio-economic development among the partners of the trade.

Trade that occurs within the borders of a country is called domestic trade. Trade that occurs between two or more countries is called international trade.

Trade led to the development of economic theory. The classical economists formulated the following propositions about international trade:

(i) some trade is better than no trade and

(ii) free trade is better than restricted trade.

A better concept of international trade was proposed by David Ricardo based on the principle of comparative cost advantage. According to this principle, “the trade between two countries in two commodities takes place when each country specialises in the production of that commodity in which it has absolute cost advantage”.