S6 Economics Notes: International Trade (External and Foreign Trade)

These Senior Six Economics notes cover international trade, which is also called external or foreign trade. They start by defining terms such as exports, imports, bilateral and multilateral trade, visible and invisible trade, and entrepot trade. Next they explain why trade between countries happens. They also set out Adam Smith's principle of absolute advantage and David Ricardo's law of comparative advantage, with worked opportunity-cost examples, the assumptions behind each theory, and how far they apply to developing countries. Later sections look at why countries take part in international trade and at its positive role, including technology transfer, wider markets and government revenue.