Trade Basics

Trade Barriers and Free Trade

Sometimes a government wants to limit the imports coming into a country. It may want consumers to buy goods made within the country. Governments may put in place trade barriers to limit international trade. Free trade is trade free of trade barriers.

Development is the growth of a country’s economy or an increase in the standard of living of its people. A developed country has a strong economy and a high standard of living. Most countries in the world are developing countries. They have less productive economies. Their people have a lower standard of living.

Economists can measure a country’s economy. They use a tool called gross domestic product, or GDP. A country’s GDP is the total value of all goods and services produced there in one year.

A country’s people can increase their level of development. One way is to find more resources so they can produce goods and services. Another is to invest in capital goods—tools and other equipment to make goods more efficiently. A third way is to invest in workers’ skills and knowledge, or human capital. That makes workers more productive.