In simple words, Trade is the swapping of goods and services from one person/entity to another, often in exchange for money. It has an impact on a nation’s financial development by creating employment opportunities in the economy and giving taxes to the government.
Trade between 2 parties is called bilateral trade while trade between more than 2 parties is called multilateral trade.
• In the early days, Let’s suppose there are two people, Ravi and Kavi. Ravi has cereal but needs rice, whereas Kavi has rice but needs cereal. So, Ravi and Kavi can exchange goods to fulfill their own requirements.
• In these days, People sell and purchase of goods and services in exchange for money.
Some benefits of Trade:
• Increase large-scale production
• Traders can build a stronger network in the market
• Increase efficiency
• Encouraging Investment
• Increasing the nation’s profitability
• Maximum utilization of natural resources
Types of Trade
1. Domestic Trade- Also, known as Internal Trade, when trade is done within the same country. Trade among the traders of Delhi, Punjab, Maharashtra, Chennai, etc., or within India/home country. It is further classified into 2 categories:
• Wholesale Trade: When trade involves selling and purchase of goods in bulk. In this trade, large quantities are purchased from manufacturers for the purpose of reselling them to retailers, merchants, and middlemen.
• Retail Trade: In this trade, retailers purchase goods from wholesalers for the purpose of reselling them directly to consumers. The retailer acts as a middleman between a wholesaler and a consumer.
2. Foreign Trade- When trade is done between two countries, it is known as International Trade. Trade is done between India and Sri Lanka, India and UK, or China and Russia. It is further classified into 2 categories:
• Import Trade: Purchase of goods and services from different countries. In this trade, the home country needs to pay for the goods.
• Export Trade: In simple words, it involves the selling of domestic goods to another country. Goods exported to a different country are known as Export trade.