Trade means buying and selling of goods and services to satisfy human wants. In the olden days, trade was carried out by barter system whereby goods are exchanged for goods and services for services without the use of money.
Importance of trade
- Trade helps in bringing producer and buyer into contact
- It facilitates means of selling surplus goods
- It prevents wastage of some products
- It helps producers to market their goods
- It brings two or more countries together through international trade.
Forms of trade
Trade can be divided into two: (i) Home trade (ii) Foreign trade
- HOME TRADE: is buying and selling within a geographical boundary e.g. Lagos – Port/Harcourt, Oshodi – Idumota. It is also known as internal or domestic trade
Home is divided into: (i) Wholesale trade (ii) Retail trade
- WHOLESALE TRADE – is buying in large quantities/bulk from manufacturer/producer and selling in small quantities to the retailer.
- RETAIL TRADE – is buying in small quantities from the wholesaler and selling in units to the final consumers
- FOREIGN TRADE – is buying and selling between two or more countries e.g. Ghana – Nigeria, Germany – Nigeria. It is alsoknown as international or external trade.
Foreign trade involves the use of different currencies and different languages.
Foreign trade is divided into:
- Import – takes place when goods are sent from outside country into a particular country e.g. imported goods to Nigeria are television, machine, vehicles, drugs etc.
- Export – takes place when a particular country sends goods to another country e.g goods sent from Nigeria to China are export goods e.g. crude oil, cassava, cocoa etc
- Entrepot – is importing of goods for re-exporting purpose. The goods already import into a country for the purpose of re-exporting
Exercise: (i) Explain five roles of customs and excise in foreign trade
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