Types of trade exchange
What are the types of trade exchange?
Trade exchange is known as a type of barter, which involves more than one company, all of which usually belong to one central main company, as these companies deal with each other far from the actual capital using interest-free credit accounts.
Local exchange is defined as an exchange between local economic companies that allows its members to exchange goods and services with each other, and the local exchange depends on the use of a local currency that is traded or exchanged for goods or services, as it contributes to increasing the purchasing power of individuals and companies.
For example, a person wants to paint his house and the painter agrees to work, and when the paint finishes work, the homeowner pays him the rent, as he can then use this money elsewhere to buy a specific good or service.
Regional exchange means that it is the exchange concluded between two or more countries within a treaty that ensures the facilitation of the movement of goods and services across the borders of the members participating in it, as the agreement contains internal rules that are applied by all member states and external rules that are binding on all members when dealing with countries outside The agreement. An example of this is the Boston and Chicago Stock Exchanges for stocks and bonds in the United States of America.
International or global exchange is the cross-border exchange of goods and services between countries, with differences in competitive advantages on some incoming products, as the exchange is coordinated between exports and imports between countries, and is classified as a type of foreign trade. An example of this is that a country “A” that has cheap labor moves to a country “B” that has a high income, so the high income is relatively cheap compared to the labor force.
Bilateral exchange is defined as the exchange of goods between governments or companies in two countries, as it is often without currencies, and is part of the global exchange and can be multilateral, but it is not common like other types of exchanges. An example of this is the trade in nuclear materials.
Multilateral trade means that it is international trade between all countries that have import and export agreements for goods and services, an example of this is the North American Free Trade Agreement (NAFTA), which brings together the United States, Canada and Mexico.
Trade exchange aims at the following:
- Companies or countries can understand the true value of their stocks of goods and services.
- Achieving job opportunities for all parties.
- The commercial sector does not bear any additional financial burdens.
- Trade exchange is a powerful way for companies wishing to expand for investment and growth, as it increases the volume of economic activity.
- Trade exchange contributes to increasing market transparency in achieving a fair price.
- It works to develop the infrastructure and various transportation centers.
- It increases and raises the efficiency of trading in the market, as it obliges everyone to follow strict laws that guarantee the interests of everyone.
- It provides objective information about the prices of goods and services traded in the market to facilitate the assessment of the economic situation and the way to improve it.
Trade exchange is a form of barter that occurs between two or more parties, as the exchange takes place in isolation from capital and by relying on credit accounts. The methodology of trade exchange depends on imports and exports within the framework of the type of trade exchange that takes place between the parties. Trade exchange is divided into different sections, the most prominent of which are: local exchange, regional exchange, global exchange, bilateral exchange, and multifaceted trade. The importance of trade exchange and its benefits can also be realized through the countries’ keenness to establish trade and economic relations that contribute to strengthening their local markets and creating job opportunities in them.