“Commerce changes the fate and genius of nations”
Nature and Scope of Commerce
The literary meaning of trade is exchange of goods. It may be defined as the exchange of commodities between individuals or groups wither through barter system of through any medium such as money. It includes all the selling and buying activities either within a country or across the boundaries of the country. In actual practice, trade is the whole procedure of distributing the goods produced by producing by different persons or industries to their ultimate consumers. It is therefore, said “the trade removes the personal hindrance in exchange of commodities”
“Trade is an activity of buying and selling of goods for money or other goods”
Trade can be classified into two components:
- Home Trade
In Home Trade, exchange of goods or trade is conducted within the boundaries of a particular country. Seller and buyer belong to the some country. It is also known as domestic, local, or internal trade. Home trade has two types.
a) Wholesale Trade
Wholesale trade means buying and selling of goods in large quantities. Wholesalers buy goods from producers in order to sell them in small quantities to the shopkeepers / retailers. Wholesaler has specialized dealings in particular items. He purchases in bulk from producer or industrialists and sell them in small quantity to retailers.
Retailing means selling the goods in small quantities to the ultimate consumers. Retailer is a middleman who purchases goods from manufacture or wholesaler and provides these goods to the consumers near their houses.
- Foreign Trade
Foreign trade is a trade or exchange of goods and services between two or more independent countries of their mutual advantages. It includes import and export of commodities among the producer and consumer countries. Foreign or international trade is an integral part of economy and plays a vital role in economic growth and social welfare of a country. Foreign trade has two types.
When a country buys goods and services from other countries, it is known as import trade. For instance, Pakistan buy petrol from Iran.
When a country sells goods and services to other countries, it is known as export trade. For example, Pakistan sells rice to European countries.
In Entrepot trade, goods are imported from various countries with a view to re-export them to other countries. In this type of trade, goods are kept in bonded warehouses till they are re-exported. No import duty is charged on the goods. Crude petroleum and petroleum products are the example of Entrepot trade.
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