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# Foreign Trade of Consumption

## Definition

The trade that involves purchasing foreign goods for home consumption, either with domestic produce or with other foreign goods. Foreign trade of consumption brings foreign products into a country for domestic use, potentially replacing domestic production with foreign imports.

## Source Chapter

Book II, Chapter 5

## Context

Smith identifies foreign trade of consumption as less beneficial than home trade, arguing that it replaces only one domestic capital while the other capital remains in the foreign country. He emphasizes that foreign trade is less efficient at encouraging domestic productive labour than internal trade.

## Economic Domain

Exchange

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