Trade and Globalisation

What is Trade and Globalisation?

Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains Trade and Globalisation. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.

Check that you can explain Trade and Globalisation in your own words and give one example from everyday life. If you can do that, you have understood the core idea.

Understanding Trade and Globalisation helps you read the news critically and weigh up policies, choices and arguments about society.

Trade and Globalisation in detail

Trade is the exchange of goods and services between people or countries. Countries trade because they cannot produce everything efficiently, and the idea of comparative advantage says that specialising in what a country can produce at a lower opportunity cost, and trading for the rest, benefits both sides.

Globalisation is the growing connection between economies through trade, investment, technology and the movement of people. It lowers prices, increases choice and creates jobs, but may cause job losses in some industries, inequality, exploitation and environmental problems. Barriers include tariffs, quotas and regulations, and trade agreements and organisations such as the WTO aim to reduce them.

How the interactive helps you understand Trade and Globalisation

Watch the network in the interactive. Use any sliders or buttons it offers to change the values and see how the network responds.

Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of Trade and Globalisation.

Real-life uses and examples

• Use Trade and Globalisation to weigh up the pros and costs of a policy or decision.
• Explain Trade and Globalisation to a classmate using a choice you make yourself, such as spending pocket money.
• Give a balanced answer about Trade and Globalisation by considering more than one point of view.

Common mistakes to avoid

• Confusing a short-term effect with a long-term one.
• Giving an opinion without evidence or a clear economic or civic reason.
• Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.