Background to international trade
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Background to international trade book
This development led to comparative cost advantages between different places. Although some areas may be self-sufficient, and be able therefore to meet all their own agricultural and industrial needs, they will usually continue to trade. This is because, although some areas can produce some things more cheaply than others, they are unlikely to produce everything more cheaply. Each area tends to specialize in what it can produce most efficiently. The basic reason for international trade coming into existence can be stated as: 'to sell items which are surplus to domestic requirements and to receive in return those goods or services which cannot be produced, or which can be produced only inefficiently (expensively), at home'.