# Trade Encouragement

## Definition

The mutual benefits that regions or nations provide to each other's industries through market exchange. Trade encouragement occurs when different areas specialise in their comparative advantages and exchange goods, creating incentives for further production and development.

## Source Chapter

Book I, Chapter 3

## Context

Smith concludes that London and Edinburgh "at present carry on a very considerable commerce with each other, and by mutually affording a market, give a good deal of encouragement to each other's industry," demonstrating how market exchange creates reciprocal benefits.

## Economic Domain

Exchange

---
