TRADE

On the basis of the information obtained above, you will realize

that we buy the goods we need from the shops, markets or
malls around us. Generally, the sellers of these goods are not
the manufacturers of the goods. They bring these commodities
from somewhere. It is not necessary that these commodities
are manufactured in our surroundings. They are manufactured
at places very far away. They could be first brought by retail
sellers from wholesale market, factories, agricultural product
market committees, etc. and then they reach us.
We have various needs in our day-to-day life. We buy various
things to satisfy these wants. When we buy them we create a
demand for them.
To fulfill the demand of these products, the production of these
goods is carried out. The producer supplies these goods. In
other words he sells them to wholesale trader.
Thus, the buying and selling of goods is done to fulfill each
other’s needs. Those who purchase are the consumers of the
goods. The producer produces and the sellers sell the goods.
Buyers and sellers buy and sell the goods respectively. This is
called trade.
Trade is an important economic activity. The economic life of
people is interdependent. No region or country is self-sufficient.
Trade between two regions is necessary to fulfill the needs of
the people. As each region has different geographical
conditions, each region produces specific commodities.
If there is a paucity of a commodity, then there is demand for
that commodity. The place where it is abundant provides the
supply of the commodity. Thus, supply is done from regions
producing excess commodities to region facing deficit according
to the demand. For example, apples produced in Jammu and
Kashmir are sent to other states of India having a demand for it.
Trade is an old-age concept. In ancient and medieval periods,
trade was done through the barter system. In this there was an
exchange of goods with other goods. Grains were exchanged in
lieu of work done or oil, salt, honey and milk were exchanged
for grains. There was no currency used in this trade. Even today
we see traders who exchange utensils in lieu of old clothes but
this creates problems of estimating a proper price of
commodities. Earlier too such problems were encountered. As
a result, the use of currency started. Today, in this modern age,
trade is carried out with the help of currency only but barter
system is still prevalent to a small extent in remote areas
amongst the tribal people.
In the above instances, when there is buying and selling of
goods, it is said to be visible trade. On the other hand, when
there is exchange of services, it is called invisible trade.
According to the Quantity of Goods:
Depending upon the quantity of goods, there are two types of
trade: wholesale and retail.
 Wholesale trade: Traders buy commodities on a large scale
directly brought from the producers. The commodities are
also sold on large scale to retail traders. This is called
wholesale trading. Wholesale traders buy goods on large
scale from industrialists, farmers, etc. For example, the
orchard owners of mangoes or oranges sell their entire
production to wholesale traders.
 Retail trade: When the traders buy goods from wholesale
traders and sell it directly to consumers, then it is called as
retail trading. The quantity of goods sold is less in this
case. For example, the shopkeepers selling goods,
vegetable vendors in markets, etc.
According to the Extent of Region:
The buying and selling of goods happens at various levels. On
that basis, trade can be divided into local, regional, national
and international trade.
 Domestic trade (internal trade): This trade takes place
between different regions within the same country. The
size of the country, diversity, distribution and availability
of natural resources affect the internal trade within the
country. The size of population, transport and
communication services, the living standard of the
people, marketing system lead to large scale internal
trade. In India, factors like diversity in geographical
conditions and high population also affect the domestic
trade. A country’s development is dependent on the
extent of the domestic trade. If there is good economic
growth, then trade will also be more. Thus, there is
positive relation between economic growth and trade.
 International trade: International trade means the
exchange of goods and services of one country with
other countries. Some countries produce specific
products in excess, for example, crude oil in Saudi
Arabia, Kuwait and wheat production in USA, Canada,
etc. These products are sent to countries having
demand for those goods. This leads to the beginning of
international trade.
When international trade takes place between two
countries it is bilateral trade. When it occurs between
more than two countries it is called multilateral trade.
  Export and import: export and import are the basic
processes of international trade. When a country buys
those goods and services which are scarce in their own
country from another country, it is known as import.
When a country produces excess goods or services than
required, it sells these to the countries which have
demand for it. This is called export.
Balance of trade:
The difference between the import and export value of a
country in a specific period is called balance of trade. Following
are the types of balance of trade.
 When the value of imports is more than the value of
exports, it is called ‘unfavorable balance of trade’.
 When the value of exports is more than the value of
imports, it is called ‘favorable balance of trade’.
 When the value of exports and imports is almost the
same, it is called ‘balanced balance of trade’.
International Trade Organizations:
Carrying out trade at an international level is a more complex
process than domestic trade. Trade takes place between two or
more nations. Factors like the economy of the country,
government policies, markets, laws, judicial system, currency;
language, etc. influence the trade. The political relations
between two countries also influence the trade between them.
Sometimes, the obstacles in the way of trading affect the
mutual relationship adversely. To avoid this, international
economic and trade organizations came up. To smoothen and
justify the process of trade between countries of different
economic standing, some international economic organizations
were formed. These organizations work towards the facilitation
and growth of international trade. The details of a few
organizations have been given here in the following table.
Name of the Number of member- Headquarter Aims/
International states and logo s functions
Trade (country)
organization
World trade Geneva 1. to provide
platform for
organization (Switzerland) negotiations in
(WTO) international trade
2. to handle the
differences related
to trade
164 3. providing
technological
assistance and
training to
developing
countries
4. monitor the
trade policies of
member states
European 28 Brussels 1. established an
integrated market
Union (EU) (Belgium) amongst member
 nations in Europe
2. free flow of
goods, services and
capital in Europe
3. custom duties
have been
cancelled on
exchange of goods
within members
4. common ‘Euro’
currency
established
Organizatio Vienna 1. controlling the
international trade
n (Austria) of crude oil
Of 2. controlling the
petroleum 13
rates of crude oil
exporting production among
member states
countries 3. maintaining
(OPEC) consensus in oil
export
South Asian 8 Kathmandu 1. finding
satisfactory
Association (Nepal) solutions to the
For Regional common problems
Cooperation faced by countries
(SAARC) in South Asia
2. increasing social
(SAARC) welfare, raising the
living standard and
increasing regional
cooperation
among member
states
3. to remove
unrest in South
 Asia
Association 10 Jakarta 1. expanding social
and cultural
Of South- (Indonesia) harmony along
East Asian with economic
Nations growth in SE Asia
(ASEAN) 2. promoting
regional peace
3. promoting tax
waivers for trade
growth in member
states
Asia-Pacific 21 Singapore 1. free trade and
economic
Economic cooperation in
Cooperation Asia-Pacific Ocean
(APEC) region
2. promoting
regional and
technical
cooperation
among members
Brazil, 5 Shanghai 1. make funds
available for
Russia, (China) growth of
India, China economics of
and South members
Africa 2. enhancing
mutual economic
cooperation
3. strengthening
economic security

Importance of Marketing:
Modern industrial social fabric, globalization and availability of
abundant choices/alternatives of the products are the structure
of today’s business world. In this context, the existence of
marketing system for trade is very important. Through
marketing one can increase business systematically. The
production can be distributed all at once on a large scale. The
product can reach a large numbers of consumers. The selling
price of the product also increases. Also, defective products can
be recalled from the market. Therefore, in today’s era,
marketing is a vital part of trading systems.
Advertisements making the customers feel the need to buy the
goods are on the rise. Reaching the maximum customers,
attracting consumers to the products and making consumers
buy the products are the objectives behind them.
In recent times, information technology and media have
affected the marketing systems deeply. Because of the
revolution in the field of information technology, the whole
world has become a big market. Through internet we can get
information about the production taking place in various
countries. This makes numerous options available to the
customers. It is due to internet that customers can use facilities
like the ‘online trading’, ‘e-marketing’, etc.
If a product is advertised using incorrect information,
fraudulent means or making exaggerated statements to cheat
the consumers, pointing out the shortcomings of the
competitors, and then advertisements tend to lose our trust
many a times. Therefore, while advertising, it is necessary to
follow rules and regulations. The consumers should also
beware of such advertisements. That is why the consumer
protection act has been enacted. It is necessary that the
consumer recognizes his own needs and buys goods at
reasonable rates.