According to Adam Smith, mutually beneficial trade requires each nation to be the least-cost producer of at least one good that it can export to its trading partner.

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This statement aligns with the theory of comparative advantage, which was developed by David Ricardo but is often associated with Adam Smith. The theory states that even if one country is more efficient at producing all goods than another country, trade can still be mutually beneficial if each country specializes in producing the good for which it has the lowest opportunity cost and then trades with the other country. This allows both countries to consume more of both goods than they could produce on their own.

According to Adam Smith, Mutually Beneficial Trade Requires Each Nation