Where would we be without trade? Naked and hungry is my guess. People have been trading for millennia and we are better off because of it. Trade has occurred throughout all of human history and prehistory. Trade occurred back in the Stone Age with the exchange of tools and physical goods through bartering. Today we have "currency," which makes exchange much easier and that facilitates trade in the global community for tools and everything else from agricultural products to zithers. We even trade ideas!
You are in the process of becoming a specialist so that you can trade what you do best (whether that is growing crops, advising farmers, working with agronomists, or becoming an animal scientist), in exchange for other goods and services. Trade is very much about specialization to ensure that society produces goods and services most efficiently. In fact, we are the only animal that trades ideas, which has enabled society to advance at such a rapid rate.
The notion of trade is relatively simple, and albeit the gains from trade can be extensive and most often outweigh the losses, trade is regulated and can be highly politicized. You’ve probably heard about free trade, fair trade, and trade agreements that either promote or hinder the exchange of goods. You’ve also likely heard about protectionism, trade sanctions, and trade barriers. Our exploration of trade begins with the impetus for exchange and an explanation of how, in the simplest form, trade will result in the production of greater numbers of goods at lower prices. We will then move on to discuss potential gains and losses to producers and consumers resulting from trade and specialization, particularly with respect to agriculture.
Upon completion of this module, you will be able to:
- Discuss the benefits of trade.
- Explain comparative and absolute advantage.
- Identify the economic gains from trade that accrue to producers and consumers.
- Evaluate the effects of trade policy.
- Read this module.
- Chapter 33 – Trade.
- Chapter 34 – Globalization.
- Read the links within the module.
- Complete your choice of assessments at the end of the module.
Conference Board of Canada. (2012, June 19). Canada's trade strengths come from natural resources and related industries. News Release, 13-06. Retrieved from: https://www.newswire.ca/news-releases/canadas-trade-strengths-come-from-natural-resources-and-related-industries-510395601.html
Journey, E. (No date). Where are GMO's banned? GMO Watch. Retrieved from: https://gmowatch.com/where-are-gmos-banned
Ridely, M. (2010). When ideas have sex. TEDGlobal. Retrieved from http://www.ted.com/talks/matt_ridley_when_ideas_have_sex
Sorensen, C. (2016, November 4). Why looming trade troubles are bad news for Canada. Macleans. Retrieved from: http://www.macleans.ca/economy/why-looming-trade-troubles-are-bad-news-for-canada/
Taylor, T., & Greenlaw, S. (2014). Chapter 33: Trade. In Principles of Economics. OpenStax. Available online: http://open.bccampus.ca/find-open-textbooks/?uuid=d7fed8c0-e900-4bef-b414-14f48122cba2&contributor=&keyword=&subject=Economics
Taylor, T., & Greenlaw, S. (2014). Chapter 34: Globalization. In Principles of Economics. OpenStax. Available online: http://open.bccampus.ca/find-open-textbooks/?uuid=d7fed8c0-e900-4bef-b414-14f48122cba2&contributor=&keyword=&subject=Economics
Key Terms and Concepts
- Absolute advantage
- Comparative advantage
- Free trade
- Gains from trade
- Lobby groups
- Non-tariff barriers
- Trade policy