Third, Ricardo and other early economists based their theories on trade in goods, and they did not take into account trade with factors of production. Today, however, basic production factors such as labour, capital and technology are being negotiated. The consequence of trade in factors of production is that factor compensation will be complete in a shorter period than in the commodity trade alone. The export of services consists of all services provided by residents to non-residents. National accounts record all direct purchases made by non-residents in a country`s economic territory as exports of services; Therefore, all foreign tourists` spending in a country`s economic territory is considered part of that country`s services export. International flows of illicit services must also be included. Many types of services, such as telecommunications. B, are closely linked to other economic activities. Trade liberalization in these areas can have a considerable economic impact. For example, reducing costs and increasing the availability of telecommunications services can help manufacturers compete with global markets, enable farmers to learn the latest techniques, and help other service sectors such as tourism, which can now reach the global market via the internet. The liberalization of telecommunications services has even facilitated the creation of a new form of enterprise, namely off shoring, in which companies relocate some of their core activities, such as telemarketing call centres, to low-cost sites in other countries. From the time of Adam Smith in 1776 until the introduction of the GATT in 1947, the theory of economic trade developed quite slowly. However, since the creation of the GATT in 1947, there have been a number of significant changes in the traditional Western economic theory of international trade.
These amendments largely update the fundamental theory of trade to reflect the new realities of industry and trade. However, economic theory has evolved considerably since the days of Adam Smith and has evolved rapidly since the creation of the GATT.