Trade is the buying and selling of goods and services with the aim of making a profit.
Importance of trade:
Trade plays a vital role in any economy. The various roles played by trade in the economy include:
- Trade helps people to acquire what they cannot produce
- It avails a variety of goods and services thereby improving the peoples living standards
- Creates an outlet for goods thereby enabling the producers to dispose of their surplus produce, especially for agricultural products
- Trade creates employment opportunities where individuals engaging in trade are able to be self-employed and equally employ others to work for them.
- Trade encourages specialization and division of labour some individuals may specialize in certain industries and sectors which improves efficiency in those sectors. specialization is where one focuses on what he does best and exchanges the products of their labour with others who are likewise concentrating on their best areas of excellence hence a high level of production of goods and services.
- It promotes peace, social relations and understanding of the parties involved since they depend on one another
- It provides revenue to the business and the government in form of taxes and fees charged on the various trading activities
- Trade ensures a steady supply of goods and services which promotes optimism and stability in the price of commodities and the general economy
- It encourages the exploitation of local resources as traders create goods and services using locally available resources thus they are put into good use
- Trade encourages economic growth and development. This growth has led to a reduction in absolute poverty