Definition
- Gain from trade
- A gain from trade is the extra a country can consume, beyond what it could produce on its own, as a result of specialisation and trade.
- Not to be confused with: Specialisation
- Specialisation is when a country shifts resources to focus on producing a good in which it has a comparative advantage.
Test yourself
What is the difference between gain from trade and specialisation?
Specialisation is the shift of resources; the gain from trade is the extra it lets a country consume.