ABSTRACT
Adam Smith wrote his famous book on the Wealth of Nations at the beginning of the Industrial Revolution in Britain. He had travelled in many European countries and attempted to explain in his book why the British standard of living was higher than in other European countries. Unlike the French physiocrats who attributed the growth of national income to agricultural productivity, he concentrated his explanation on manufacturing industry and trade. The division of labour in manufacturing facilitated the use of new machines and the accumulation of specialized skills on the part of the operatives. The opening of markets and the reduction of barriers to trade within and between countries enabled these manufacturers to compete, to enlarge their market and to enjoy scale economies for their products, as well as permitting still further division of labour.
