Trade is the buying and selling of goods or services between individuals or companies, either on a large scale or in smaller markets. The exchange of items is based on the value of each good or service, typically using money as a measure of value. Trade can be domestic or international. It can also take place through a variety of channels, such as physical markets and the Internet. It fosters economic development, increases product availability and competition, encourages international relations, and maximises the use of resources.
People have traded items since prehistoric times. Anthropologists have found evidence of barter systems that took place alongside early forms of currency. For example, a man might trade his spear for some obsidian he needs to make a tool. In modern times, trade is a key part of the economy. It allows people to specialize and focus on what they are best at. Companies can then purchase the materials and skills they need to produce their products from other locations. This is known as the law of comparative advantage, and it is a regular feature in introductory economics classes.
Many countries have global trading networks. The products they sell to other countries are called exports, and the products they buy from other countries are called imports. International trade is important because it creates jobs and wealth for countries that sell goods and services around the world. But it is not always in the best interest of a country to open its borders to foreign trade, so some economists support protectionism.