ZIMSEC O Level Commerce Notes: Introduction, importance and reasons for International Trade
- Trade is the buying and selling of goods and services in order to satisfy the needs and wants of consumers.
- Trade between two countries is known as bilateral trade.
- Trade between more than two countries is known as multilateral trade.
- Both bilateral and multilateral trade are classified as international trade.
Why Zimbabwe Trades with other countries?
- Zimbabwe does not have all it requires to feed its populace i.e. like most countries it is not self-sufficient.
- It therefore buys goods and services from other countries in order to:
- Get what it does not have due to climatic conditions for example raw materials such as cocoa.
- Get what it cannot manufacture due to lack of technological expertise or differences in technology for example vehicles.
- Access a wider rang of goods and services thus uplifting the standards of living.
- Prevent shortages for example when there is a drought.
- Obtain higher quality goods at lower prices than would otherwise be possible if they were manufactured locally.
- Benefit from comparative cost advantage.
- Get seasonal goods when they are not in season in Zimbabwe.
Zimbabwe also sells goods and services to other countries in order to:
- Increase sales by widening its market thus creating employment for its people within and outside its borders.
- Allow specialisation in the production of goods.
- Get rid of excess goods it produces.
- Obtain foreign currency which is required to pay for the import of goods and services.
- Keep its local industries busy producing goods and thus also creating employment.
- Force local industries to produce goods of high quality because international markets are competitive.
- Foster peace and friendship with other countries.
- Promote cultural, scientific and economic cooperation with other countries e.g. China.
- Benefit technology by trading with more developed countries.
To access more topics go to the Commerce Notes page.