“Commerce changes the fate and genius of nations”
“Commerce changes the fate and genius of nations”
Nature and Scope of Commerce
- Trade
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”
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“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.
b)Retail
Trade
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.
a)Import
Trade
When a country buys goods and services from other countries,
it is known as import trade. For instance, Pakistan buy petrol from Iran.
b)Export
Trade
When a country sells goods and services to other countries,
it is known as export trade. For example, Pakistan sells rice to European
countries.
c)Entrepot
Trade
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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