Picture your neighbourhood. Rina Apa makes the best biryani on the street. Her neighbour Karim Bhai is a tailor who can stitch a shirt in an hour, but his biryani tastes like rice that has had a bad day.
So what happens before Eid? Rina Apa cooks extra biryani and sends some over. Karim Bhai stitches her children's Eid clothes. Nobody signed a treaty. Each simply did what they do best, swapped, and both families ended up with more and better things than if each had done everything alone.
Countries trade for exactly the same reason. In this lesson you'll see why, what Bangladesh sells and buys, how the money side works, and why trade also needs rules.
No person, company or country can make everything well. It would take too long, cost too much, and the quality would suffer.
So people specialise: each focuses on a few things, makes them well, and trades for the rest. A farmer grows rice and buys a phone. A phone company makes phones and buys rice.
Trade simply means buying and selling. International trade means the buyer and the seller are in different countries.
In everyday life
Think about your own day. Your toothbrush, your phone, the fuel in the bus and the wheat in your morning roti probably came from several countries. You didn't make any of them, and you didn't need to.
Key words
Specialise
Focus on making a few things well, instead of trying to make everything.
International trade
Buying and selling between people or companies in different countries.
A country does best at things where it has a natural edge: the right land, climate, skills, number of workers, or experience.
Bangladesh has millions of skilled garment workers and decades of experience, so it has become one of the world's biggest exporters of clothes. But Bangladesh grows very little cotton, and not enough wheat for everyone, so it buys those from other countries.
Economists call this comparative advantage: a country gains by making the things it gives up the least to make, compared with other countries, and buying the rest. Even a country that is better at everything gains by focusing on what it is relatively best at.
In everyday life
Even if Karim Bhai could cook biryani as well as Rina Apa, every hour he spends cooking is an hour he isn't stitching, and stitching earns him far more. Rina Apa gives up much less to cook. So it pays them both to do their own job and swap. That is comparative advantage in one sentence.
Key words
Export
Selling goods or services to a buyer in another country.
Import
Buying goods or services from a seller in another country.
Comparative advantage
Making what costs you the least, in terms of what else you could have made, compared with others, and trading for the rest.
When Bangladesh exports, buyers abroad pay in foreign money, usually US dollars. When Bangladesh imports, it must pay in foreign money too.
So exports are how a country earns the dollars it needs to buy fuel, wheat, machinery, medicine and raw materials. Money sent home by Bangladeshis working abroad (remittance) is another big source of dollars.
If a country buys more from the world than it sells, the gap is called a trade deficit. For many years Bangladesh has imported more than it exported, and remittances help fill that gap. This is why foreign exchange is precious, and why Bangladesh Bank, under the foreign exchange law, keeps careful rules on how it comes in and goes out.
In everyday life
A family earns from two jobs: the father's salary at home and a daughter's salary sent from abroad. They spend on rent, food and school fees. If spending is more than the father's salary, the daughter's money fills the gap. Bangladesh's exports are the father's salary; remittances are the daughter's.
Key words
Foreign exchange
Money of other countries, such as US dollars or euros, and the buying and selling of it.
Remittance
Money sent home by people working abroad.
Trade deficit
When a country imports more than it exports in a period.
Trade is not only things you can drop on your foot. Countries also trade services: software, design, call centres, shipping, banking, tourism and education.
A freelancer in Khulna building a website for a shop in Canada is exporting a service. A Bangladeshi student paying fees to a university in Malaysia is importing one.
In everyday life
When you watch a film on a foreign streaming app and pay the monthly fee, you are importing a service, from your sofa.
Key words
Services
Work done for someone, rather than a physical product. For example, software, transport or teaching.
Jobs: millions of Bangladeshis work in export industries.
New ideas and technology arrive with imported machines and foreign buyers.
But it also brings worries:
Local producers can lose out to cheaper imports.
Depending on one main export is risky. Garments earn most of Bangladesh's export money, so a fall in world demand for clothes hits the whole country.
Shortages of foreign exchange can make imports hard to pay for.
That is why governments make trade rules: which goods may come in or go out, what duty to pay, and how the money must move. You'll meet those rules in the Import and Export rooms.
In everyday life
When cheap imported toys flood the market, children are happy and parents save money, but the local toy maker may struggle. A good trade policy tries to keep both the shopper and the maker in mind.
Key words
Trade policy
A government's rules and plans for imports and exports, such as duties, bans and incentives.
Duty (tariff)
A tax charged on goods when they are imported (or sometimes exported).
So far: countries trade for the same reason neighbours swap biryani and stitching. Each does what it does best and trades for the rest. Exports earn the foreign money a country needs for imports, and remittances help when imports are bigger. Trade brings choice, jobs and ideas, but also risks, so countries set rules.
Next: who are all the people behind one trade deal? (Hint: there are many more than just a buyer and a seller.)
Check yourself
Four quick questions. Nobody sees your answers but you.
Each country gains by focusing on what it does relatively best and buying the rest. Bangladesh has many skilled garment workers but grows very little cotton.
Buyers abroad pay for exports in foreign money. Remittances from Bangladeshis working abroad are another big source.
Trade includes services. The freelancer sells work to a buyer in another country, so it is a service export.
When most export money comes from one product, a drop in demand for it hits the whole economy.
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