What is the significance of trade? Why oh why does it occur? (What i know is that 2 parties gain more if they trade but is there anything else? i feel i missed something...)
Fundamentally, that's it. With trade, both parties are better off.
Now then, the existance of trade leads to specialization. This improves overall productivity.
The existance of trade also leads to markets. With markets, economists can measure the relative value of goods and services.
Trade is indeed significant for several reasons beyond parties gaining more. Here are a few additional aspects to consider:
1. Efficient allocation of resources: Trade allows countries or individuals to focus on producing goods and services in which they have a comparative advantage. By specializing in what they do best and trading for other goods, resources are allocated more efficiently, leading to higher overall productivity.
2. Access to a wider variety of goods: Trade enables people to access goods and services that may not be available or produced in their own country. It provides consumers with a greater variety of choices and allows them to access products that may be of better quality or more affordable.
3. Economic growth and development: Trade has been a driving force behind economic growth for many countries. By engaging in international trade, countries can expand their markets, attract foreign investment, and increase their GDP. This can lead to job creation, improved standards of living, and overall economic development.
4. Transfer of knowledge, technology, and innovation: Trade provides opportunities for the transfer of knowledge, technology, and innovation between countries. Through trade partnerships, ideas and technological advancements can be shared, leading to the dissemination of new ideas, improved production techniques, and increased innovation.
5. Cultural exchange and understanding: Trade not only involves the exchange of goods and services but also exposes people to different cultures, traditions, and ideas. It promotes cultural exchange, fosters understanding, and helps build relationships between nations.
To understand the significance of trade in more depth, it is helpful to study international trade theory, such as comparative advantage, absolute advantage, and the gains from trade. These theories provide a deeper understanding of why trade occurs and its positive impact on individuals, societies, and the global economy.