Trade is critically important to fuel economic growth, break down local monopolies, create employment opportunities and jobs, raise living standards, and help people provide affordable goods and services to their families.
 |
| Importance of trade |
What is the Importance of Trade in Economic Development?
Trade is the process of buying and selling goods or services; So that the buyer pays compensation to the seller. Trade can take place through the exchange of goods or services between the parties.
Trade is the important means by which money moves and circulates, because trade has multiple sources of profit, unlike industry and agriculture.
Trade is the complementary process to industry and agriculture, so none of them takes place without the existence of trade, and profits are not gained except through trading in products.
Trade is very important for fueling economic growth, creating job opportunities, breaking down domestic monopolies, rising living standards, and helping people provide affordable goods and services to their families.
Trade is considered the most important means of cultural exchange. Trade puts the name of the country in which it is located on the lists of the best countries in the world if there is a trade revolution in that country.
Trade can make there a large number of job opportunities for everyone, as any commercial institution has the strength of its workers to double the number found in factories and farms.
Trade contributes to cutting government expenditures by expanding the sources of supply of goods and services, in addition to enhancing competition for government procurement.
During emergencies such as floods, earthquakes, and wars, trade assists in reaching basic requirements such as food, medicine, and relief measures for the affected areas.
Why is Trade So Important for the Development of the Country?
There are a set of points through which we can recognize the importance of trade, and they are as follows:
Trade strengthens relations between nations:
Trade strengthens relations between nations, by achieving peace, stability, and beneficial exchange between people.
The production is intended for final consumption. Trade enables producers and consumers to be linked through retailers and wholesalers, as well as through trade aids.
Consumers obtain information about various commodities through advertisements and salesmanship.
Manufacturers are regularly informed about the likes and dislikes of consumers through marketing research. Thus trade creates a connection between producers and consumers.
Trade tries to satisfy the increasing desires of the people:
In general, people's requirements or desires never end. They can be categorized as "primary needs" and "secondary needs".
Trade makes the distribution and transportation of goods possible from one part of the world to another.
Today we can buy anything produced anywhere in the world. This in turn has enabled man to satisfy his myriad requirements and thus enhance social welfare.
Trade creates more and better jobs:
The growth of trade, industry and international trade leads to the growth of trade agencies like banking, transportation, warehousing, advertising, etc.
These agencies need people to take care of this job. An increase in production leads to an increase in demand, which leads to an increase in employment.
Trade creates job opportunities, by strengthening economic sectors, which lead to creating stable jobs, increasing per capita income, and thus improving livelihoods.
Thus the development of trade generates more and more employment events for millions of people in any country.
Trade helps raise our standard of living:
Standard of living refers to the enjoyment of quality of life. When a person consumes more products, his standard of living improves. To consume a variety of commodities, he must be able to secure them first.
Trade plays an important role in improving quality, labor standards, and the environment by increasing competition and professional exchange between partners.
Trade helps us get what we want at the right time, in the right place, at the right price, and thus helps improve our standard of living.
Trade encourages innovation and creativity:
Trade encourages innovation by facilitating knowledge exchange, investment, and development, especially in foreign direct investment.
International trade helps countries to grow faster, innovate, improve productivity and provide higher income and more opportunities to their people.
With the growth of trade and commerce, there is a growing need to expand and modernize aids to trade. Trade aid is also known as auxiliaries who provide support to perform activities related to industry and commerce.
It includes transportation, communications, warehousing, banking and finance, insurance, advertising, and other related services.
Trade leads to industrial development:
Commerce is concerned with the smooth distribution of goods and services provided by industry. Without trade, the industry will find it difficult to keep up with the pace of production.
Trade helps increase the demand for goods on the one hand, and on the other hand, it helps industries by providing them with necessary raw materials and other services. Hence, trade helps bring about better divisions of workers and industrial progress.
Trade encourages foreign exchange market:
Through trade, we can secure a fair and equitable distribution of goods throughout the world. With the help of transportation and communication development, countries can exchange surplus goods and earn foreign exchange, which is very beneficial for importing advanced machinery and technology. It ensures the country's faster economic growth.
Trade helps diversify exports by allowing developed countries to enter new markets and materials, which leads to diversification of production possibilities.
Trade increases national income:
Trade is central to ending global poverty. Trade helps promote development and reduce poverty by increasing trade and investment opportunities and developing the private sector that increases productivity.
When production increases, the national income also increases. In developed countries, manufacturing and trade together account for nearly 80% of the total national income. It also helps in earning foreign exchange through exports and import duties.
Trade benefits developing countries:
Trade enhances competitiveness and helps developing countries reduce the cost of imported goods, helping them obtain funds through investments, and increasing the value-added on products.
Trade fosters competition and diversifies the supply of goods and services, which leads to broadening options and lowering prices for consumers.
Underdeveloped countries can import skilled labor and technical knowledge from developed countries. While developed countries can import raw materials from underdeveloped countries. This aids in sowing the seeds of industrialization in underdeveloped countries.