Trade theories explain how and why countries engage in international trade. They help us understand the benefits of trading goods and services across borders. For example, the Comparative Advantage theory suggests that countries should specialize in producing goods they can make more efficiently than others, leading to increased overall production and consumption. Another important theory is Absolute Advantage, which states that a country should produce goods it can create more efficiently than other countries. These theories guide policymakers and businesses in making decisions about trade, ultimately contributing to economic growth and improved living standards around the world.