Trade - Term Overview

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Trade consists in the exchange of goods and services between various parties in exchange for different goods and services of equal value, or in exchange for money.

The creation of money as a tool for change has greatly simplified trade, making it easier for one of the parties to deliver money in exchange, instead of other goods or services as was the case with bartering.

Trade exists thanks to the division of labor, specialization and the different sources of resources. Since most people focus on a small aspect of production, they need to trade with others to acquire goods and services different from those they produce. The trade exists between different regions mainly due to the different conditions of each region, some regions can have comparative advantage over a product, promoting its sale to other regions.

Types of trade

You can distinguish between:

- Retail trade: It's dedicated to the direct sale of individual products or in small quantities to consumers (such as a fruit shop for example) and
- Wholesale trade: which are the merchants that sell their products to retailers, intermediaries or other businesses.

Importance of trade

Since the emergence of the first civilizations, commerce has been a fundamental piece in the life of the human being. The Phoenician people, for example, in the 10th century BC without having an army spread their culture throughout the Mediterranean, building large ports and boats, even inventing the alphabet to carry out their transactions. These first commercial explorations revolutionized relations between territories.

The exchange of goods between peoples not only hasn't ceased to increase over the years, but is growing faster and faster. The way it's produced has also evolved, from street vendors to globalization and large corporations of the 21st century.

In recent years a new revolution in trade is taking place thanks to the development of new technologies. The online revolution is drastically changing the way of life of the human being. Trade, as expected, has been one of the great standard bearers of this revolution.

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