Trade

Trade

The process of buying and selling of goods and services on a market is known as trade. It is used in our

daily life. All the goods and services that we find in our surroundings is the result of trade.
Trade can be classified into two types which are given below:

1. Internal Trade
2. External Trade

• Internal Trade: The process of exchanging or buying and selling goods and services within the territory of a country is known as internal trade. It is done only inside the nation. For example, apple produced in Humla – Jumla is sold in Kathmandu and other different districts inside the nation.
• External Trade: The process of exchanging or buying and selling goods and services to another country or outside the territory of a country is known as external trade. It is done outside the country. For example, the clothes of “Pashmina” made in Nepal are sold to England and other foreign countries.
  Importing and exporting take place in external trade. The process of buying goods from the foreign countries is called import and the process of selling goods to foreign countries is called export. Trade is done for the benefit or to earn income with exchanging goods and services.

Trade in Nepal

Nepal is a least developed or a developing country. The main trade of Nepal is agriculture. But, it is insufficient to earn a better income for the people. Nepal is involved more in importing goods and less in

exporting goods. So, it is one of the reasons to be anunderdeveloped country. Being a landlocked country, it has no good access for importing goods. Nepalese trade is limited to India and other countries. Nepal has a good trade relationship with India only. Nepal imports machinery, textiles, electronic goods, petroleum etc. from foreign countries and exports only agro-goods like paddy, maize, timber, herbs, cardamom etc.

Diversification

Trade diversification is the process of making the trade relationship good and wider with many countries. It is one of the solutions for the trade deficit of Nepal. Nepal followed the principle of trade diversification since 2013 B.S. At that time, Nepal had started trade with third countries apart from China and India. Now, Nepal has a good trade relationship with many countries like China, India, Germany, USA, Korea, Japan and so on.

Benefits of Trade Diversification

There are various advantages of trade diversification. Some of them are given below:

• It helps to make good trade relations with many countries.
• It helps to import varieties of goods from foreign countries.
• It helps to earn more foreign currency by exporting goods to other countries.
• It may decrease the price by increasing competition for quality products.
• Consumers can buy foreign goods and products in their local areas.

Things to remember

1. The process of buying and selling of goods and services on a market is known as trade. It is used in our daily life. 
2. The process of exchanging or buying and selling goods and services within the territory of a country is known as internal trade. It is done only inside the nation. 
3. The process of exchanging or buying and selling goods and services to another country or outside the territory of a country is known as external trade. It is done outside the country. 
4. The main trade of Nepal is agriculture.
5. Trade diversification is the process of making the trade relationship good and wider with many countries. It is one of the solutions for the trade deficit of Nepal. 

• It includes every relationship which established among the people.
• There can be more than one community in a society. Community smaller than society.
• It is a network of social relationships which cannot see or touched.
• common interests and common objectives are not necessary for society.

Questions and Answers

Quiz