Pros and Cons of Home Trade

Home trade is buying and selling of services within a country. Types of home trade include merchant wholesalers, brokers, manufactures’ sales branches.

There is the free exchange of goods in home trade as the traders use similar currency and the amount of tax paid on the goods is relatively low. The transport costs are low and there is free mobility of factors of production.

Pros and Cons of Home Trade

Pros of Home Trade

  1. No problem related to tariffs and exchange rates

With home trade, the traders are found within the same country hence there is no need of an individual facing the problem of exchanging the currency and the duty to be paid either on imports or exports hence the traders enjoy the trade within the country.

  1. Contributes to the growth of the economy

When trade is carried out there will be growth in the economy in that there will be money that will be in circulation and the traders will also pay revenue to the government which can be used in other sectors such as industries hence there will be the growth of the economy.

  1. Facilitates the exchange of goods within the country

The goods are able to circulate in the country hence the consumers are able to get access to the goods which will enable them not to travel for long distances to get the goods as they will be in circulation.

  1. Creates employment opportunities in the country

When there is a circulation of goods in the country, it will require middlemen who will facilitate the supply of goods hence creating more job opportunities in the country.

  1. It improves standards of living

The middlemen who are employed will be able to earn income from it hence improving their standards of living.

  1. It utilizes the raw materials in the country

As the trade will be within the country, all the raw materials may be utilized to produce products that are needed by the consumers locally.

Cons of Home Trade

  1. Lack of resources and funds

The country may lack resources to facilitate the growth of the trade industry and this may result in restriction of growth as they will not be able to go on with the production of the commodities.

  1. Lack of professional management

There is a possibility that a country may lack funds to employ professionals in certain industries hence it may lead to the production of low-quality goods that may at the end even lack market locally.

  1. The country will not enjoy a variety of goods

Members of the country will only be able to get a limited amount of goods as there will be no Imports hence not enjoying a variety of goods from other countries.

  1. In case of surplus then the country runs at a loss

When goods are not exported then the country may run at a loss because they will not be able to dispose of the surplus commodities to neighboring countries.

Summary

Home trade is only good to a country that is developed as it will have a lot of resources and the market to utilize the commodities but for developing countries, they still need a lot from other countries hence home trade will limit them.

 

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