History

The Economy and Trade

Trade is important to the success of a country. Why? No country  can produce just enough of everything it and its people need to survive is. Can you think of an example, today or in the long history of people? Keep thinking ...

Trade is simply the trading of something for something else. This can be one good for another good, one good for money, one good for a service, a service for a good, money for a service, etc. You get the idea. Trade is an exchange of things.

 
Usually, people or countries trade things that they have too much of for things that they don't have enough of. This is the classical definition of trade and the one that will be used in the remainder of this article. (Note: You can certainly trade money for CDs or whatever and this doesn't necessarily mean you have too much money or too few CDs. However, for the purposes of this article, we will assume that you have too much of something and too little of another.)

 
 Now, why would a country have too much of something? First of all, what is that something they have too much of? Is it grain or vegetables or rice or some other kind of food? If so, they probably have too much because they planted too much of it to begin start with, or because the ground proved especially fertile and brought forth a lot more food than was expected. It could also be that the population of the area has dropped since the crop was planted. Whatever the reason, the civilization has too much food.


Countries of yesterday and today have thrived because they were able to work out agreements to get what they didn't have from other people and give what they did have to other people, often at the same time. In this way, if your civilization plants a lot of grain but not so much rice and your people like to eat both, you can give some grain to the rice-growers, get some rice from them, and eat both.

 
This is true for other goods besides food. Machinery, oil, cars, plastics, and electronics are all examples of things that one civilization produces to sell, exchange, or give to another civilization. Nearly every single day, trade keeps civilizations prospering. Planes land and take off, ships dock and leave port, trucks unload and load again--all bringing goods from one people to another and taking other goods to other people. 
 
Often, trade involves many civilizations at the same time. The grain farmers of the American Midwest might sell their grain to rice farmers in Southeast Asia, who sell their rice to people in China and Japan. The Chinese and Japanese people might eat the rice to keep them healthy so they can go to work at automobile factories, where they make cars that they sell to the grain farmers in the American Midwest.
 
Trade circles aren't always this perfect. One country might sell its goods to a country from which it doesn't accept anything in return. It all depends on the needs of its people.

Original Articlehttp://www.socialstudiesforkids.com/articles/economics/theimportanceoftrade1.htm