Foreign trade or international trade?
Daniel Diatkine
Abstract
Daniel Diatkine
Abstract
Reading The Wealth of Nations , we learn that geographic specialisation seems to obey exactly the same principle as the division of labour. And the same general principle operates between London and Portugal as between London and Lancashire. Logically, it seems that there is no analytical difference between local and international trade. In the Wealth of Nations , the ordinary differences between local trade and international trade seem only trivial. Foreign trade is very important: For example, the invisible hand supposes that agents prefer home investment to investment in foreign trade. Capital circulates between cities, and trade between cities is foreign trade. Competition generates a tendency for rates of profit to fall. This may be stopped by the expansion of the market through foreign trade, which seems to "absorb" the capital. Adam Smith suggests that it is through foreign trade that the artificer transforms himself into a manufacturer.
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Reading The Wealth of Nations , we learn that geographic specialisation seems to obey exactly the same principle as the division of labour. And the same general principle operates between London and Portugal as between London and Lancashire. Logically, it seems that there is no analytical difference between local and international trade. In the Wealth of Nations , the ordinary differences between local trade and international trade seem only trivial. Foreign trade is very important: For example, the invisible hand supposes that agents prefer home investment to investment in foreign trade. Capital circulates between cities, and trade between cities is foreign trade. Competition generates a tendency for rates of profit to fall. This may be stopped by the expansion of the market through foreign trade, which seems to "absorb" the capital. Adam Smith suggests that it is through foreign trade that the artificer transforms himself into a manufacturer.
Key concepts: International trade, International economics, Business, Economics