International trade & the balance of payments

No country can produce everything it needs, so countries trade with one another — and Namibia is a great trading nation, selling diamonds, uranium, fish and beef to the world. In this lesson we learn why countries trade, and the difference between exports and imports. We build the balance of trade and the wider balance of payments, and work out a surplus and a deficit with a simple sum in N$. We meet the exchange rate — the price of one currency in another — and see why it rises and falls, and how our own N$ is pegged to the South African rand. Finally we unlock two clever ideas that explain trade itself: absolute and comparative advantage.