Misconceptions abound when it comes to trade. Perhaps the most common is that somehow exports are good and imports bad. The reverse is the case. Exports are useful because we need the money to pay for the imports we want. There is no intrinsic benefit in spending our time producing stuff for other people.

There are related misconceptions about the exchange rate. While it can be necessary at times, a falling exchange rate is not good in itself. It makes the imports we want more expensive and means that others can get the fruits of our labour on the cheap.

Another misconception arises because when you think of trade you probably are thinking of firms in one country selling cars or wine or fridges to