Imports and Exports

A product that is sold to the global market is called an export, and a product
that is bought from the global market is an import. Imports and exports are
accounted for in the current account section in a country's balance of
payments.

Global trade allows wealthy countries to use their resources—for example,

labor, technology, or capital—more efficiently. Different countries are
endowed with different assets and natural resources: land, labor, capital, and
technology, etc. This allows some countries to produce the same good more
efficiently—in other words, more quickly and at lower cost. Therefore, they
may sell it more cheaply than other countries. If a country cannot efficiently
produce an item, it can obtain it by trading with another country that can. This
is known as specialization in international trade.

For example, England and Portugal have historically both benefited by

specializing and trading according to their comparative advantages. Portugal
has plentiful vineyards and can make wine at a low cost, while England is
able to more cheaply manufacture cloth given its pastures are full of
sheep. Each country would eventually recognize these facts and stop
attempting to make the product that was more costly to generate domestically
in favor of engaging in trade. Indeed, over time, England stopped producing
wine, and Portugal stopped manufacturing cloth. Both countries saw that it
was to their advantage to stop their efforts at producing these items at home
and, instead, to trade with each other in order to acquire them.