Long ago, before the coming of money referring to coins and bills,
Have you ever wondered how people got their things? A system of exchanging goods and services was born. It is called “barter.” In simple elaboration, trade is commonly an exchange of two parties swapping items on hand to fulfill each other’s requirements.
This process of system purely falls in the concept of a need of an individual. With this sort, it is a symbiotic relationship in which both benefit from each other. In financial terms, it is a procedure of purchasing assets and selling securities on consensual sides.
Importance of trade:
Essential for human satisfaction and wants.
Not only for earning profit; but also provides service to consumers
THE 5 TYPES OF TRADE
Internal Trade
Hence is also known as a Domestic trade or Home Trade. It takes place between several geographical and regional areas of the same nation. It supports a level of coordination and exchange between the state’s cities.
Internal trade can be sub-divided into two groups:
- Wholesale trade entails purchasing from producers or manufacturers and then selling in bulk to intermediaries, retailers, and merchants for later resale to customers.
- Retail trade- an action of direct selling of goods to consumers by retail. A retailer gets its supply to a wholesaler and then sells them to the customers or consumers. They sell goods in a few quantities.
External Trade
Trade between two separate countries is referred to as “external trade.” It is because the seller and buyer both reside in different countries, known as foreign or international trade.
External is sub-divided into three groups:
Export trade: Export trade occurs when a trader from one country sells his goods to a dealer from another country. Example: A trader in China sells his goods to a trader in the Philippines.
Import Trade: Import trade is the acquisition or purchase of items by a trader in the home country from a trader in another nation. Example: A trader in China purchases goods from a trader in the Philippines.
Entrepot trade is importing commodities from one nation, processing them, and then re-exporting them, known as the re-export of processed imports. Example: The American trader buys spare parts, equipment, and raw materials from Russia and Japan, then reassembles them to create a new product and market it to other nations.
INSIGHT
After several kinds of trade mentioned above, Any other nation or society needs a continuous supply or import of goods and services. It is a necessity, a demand, and a supply process of things. It is also a way to enhance the standard of living of every consumer. However, one disadvantage we can see here is the dependency on other countries. It could slow down the progress of other nations’ economies. Another disadvantage is the creation of a monopoly. In a monopoly market, Oneseller is only the seller of a specified product and is considered the price maker of his products. Therefore, he enjoys being the market controller, which could affect one country’s economy. On another aspect, we will talk about supply and how it affects the entire economy of each country in the following article.