What is Trade?

Trade is the fundamental state of business activity it includes sale and purchase of the goods or services.it involves the exchange or transfer of goods or services. The producers build the goods, then it transfer to the whole seller, then to a retailer and finally reached to the consumer.

History of Trade

According to www.streetdirectory.com

Trade originated in prehistoric times. It was the main facility of prehistoric people, who bartered goods and services from each other when modern money was never even thought of. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.

Types of Trade

there are two types of trade;

1.Domestic Trading

(i) wholesale trade 

(ii) retail trade

2.Foreign Trade

(i) import trade 

(ii) export trade

(iii) Entrepot Trade

1.Domestic Trade;

(i) Wholesale Trade; 

Wholesaler is a link between producers and retailer. The wholesaler buys the products in large quantities from Manufacturers and sale to retailer and retailer sell to the consumers. Wholesaler act as an intermediary between producers and retailers.

(ii) Retail Trade;  

Retail trader is a link between Wholesaler and consumers. Retailer buys the products in less quantity from the wholesalers and sells the products to the consumers as per their needs. The Retailer is the person who brings the products to consumers. Small-scale retailers include hawkers, pedlars, general shops, etc..

2.Foreign trade

(i) Import Trade;  

Import Trade means when the home country obtains or purchase the goods from another country that is called import trade. In import, a trader of any country buys the products from another country’s trader. for example, a trader from India purchases goods from a trader located in China.

(ii) Export Trade;                                                                                                                                                                                 

Export Trade means when a country sells their products to another country that is called export trade. For example, a trader from India sells his goods to a trader located in Dubai.

(iii) Entrepot Trade:

Entrepot Trade means when one country import products from one country and then re-exported to another country after adding some values.for example an Indian trader (from India) buy raw material from a Chinese trader (from China), then convert into finished goods and then re-export to a Japanese trader (in JAPAN).          

IMPORTANCE OF TRADE

 (i)Growth of the Economy;

Trade Provide growth to the economy because when trade started in any country it brings new opportunities to people. Which also brings money in public. So, trade is the most important pilar for growth of any economy.

(ii)Provide Global Presence;

When a country started trading in the domestic and International market. Global reach started automatically because the people of other countries started buying the product. So, trade provides global presence to the economy. 

(iii)Helps in Civilizations;

When trade started in any country it helps in improving personal growth of the people because trade run in a systematic way.So,when trade starts it does not only give to the people it also teach them administrations.

(iv)Provide High Quality Products;

When trade starts it brings high compositions as well. when the compositions it remove monopoly of the products.In last when trade started it provide high quality products to the consumers.

(v)Trade improves financial performance;

Once trade brings it started providing tax to the goverments  . This allows them to augment the returns they achieve on their investments into research and development.  

ADVANTAGES OF TRADE

(i) Maximum utilization of natural resources; 

Trade helps each country to utilize their natural resources in effective ways to produces high-quality products at the cheapest rate. Wastage of resources automatically reduced because once trade starts it brings high skilled employees.

 
 (ii) Trade encourages market competition;

When more brands come in the market competitions increase that gives more options and quality to the consumers at a low price and remove monopoly.Example; In India there are a lot mobiles brands has came that is providing more options and quality to the custumers.

(iii) Trade develops sympathies;    

Trade develops sympathies and creates common interests between trading country. It also exchange the ideas traditions,customs. This promotes international understanding and peace among the people.if war starts it can be remove by people love and understanding.

 (iv) Advantages of large-scale production:

When the trade started it does not only use home country but also export to other countries. This leads to larger production of the product and advantages of large production can be a benefit to all the countries.

(v) Increase in efficiency

Trade helps to country to increase their productivity because trade brings high productivity machine and best technology to the host country. This increases the efficiency and benefits to the consumers all over the world.

DISADVANTAGES OF TRADE

 (i) Economic Dependence on Developed Economies ;

The developing economies have to depends on the developed economies because developed economies provide funds,technologies machines etc. to developing nations for trades,most of the undeveloped economy in Asia and Africa are directly depend on European countries.

(ii) Political Dependence:

Most of the time trade encourages slavery. trade affects the political decisions of the country because they become a big pillar of country of their financial support. So, it starts occupying the country’s decisions.Basically it happens in backward economies.

(iii) Creates Monopoly

When big companies come in developing nations they invest money and manpower in huge quantity. So, it affects local business and creates a monopoly in the industry. Example When Amazon came to India it has effect a lot of local business.

(iv) Fear of loosing jobs

Loosing jobs is also a big fear for local skilled and educated employees.because when a big company leaves the country it fired employees in huge quantity. which creates crisis in economy.

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