We explain what trade is, its history and what types exist. In addition, the commercial code and the World Trade Organization.
What is commerce?
Trade is any form of economic activity consisting of the exchange or transfer of goods or services between the different possible economic actors. It is one of the oldest human activities and fundamental for the establishment of the first economies, as well as for the flow and expansion of cultures.
Commercial activity is part of the main and majority occupations of human beings throughout history, especially after the rise of the bourgeoisie to power after the Renaissance and the subsequent beginning of capitalism.
In that sense, the invention of money was fundamental for its development allowing the establishment of a method of appraisal or assigning value on the same scale to different products and services, which at the beginning of humanity had to be given according to barter.
Today, trade occurs on different scales, inside and outside the borders of countries, bringing the most diverse products to their potential consumers. The volume of this exchange is immense: in 2018 alone, exports from the least developed countries amounted to 8.779 trillion US dollars, 193 billion of which were destined for the most developed nations.
At the same time, a process of rising global GDP is evident. Or put more simply: in the contemporary world more and more is produced and more is traded.
See also: Free trade
History of trade
Trade is as old as civilization. Its first manifestations emerged during the Neolithic period along with the emergence of agricultural and sedentary societies: as sowing maximized the food obtained and allowed its accumulation, the possibility arose of exchanging the surplus with other producers.
Thus it was possible not only to sustain a diverse diet, but also to access other types of goods and services in which each person specialized, as new forms of production emerged such as pottery, steel and other activities.
Along with the material exchange, cultural elements were also exchanged the result of friction between ancient settlers: languages, religions, ways of thinking or information regarding distant peoples.
The great ancient empires, thus, were centers of trade in their respective regions, where different trade routes converged. Each one had its own currency that, in addition to reflecting its culture and emblems, served as a wild card to facilitate exchange between producers and merchants.
The global trade scheme developed over time, incorporating new technologies such as promissory notes or bills of exchange (debts), which made it possible to operate with money that was not yet available. In the Middle Ages the first banks arose long before money had the central place in society that it has today, thanks to the invention and expansion of capitalism in the 18th century.
Subsequently, The expansion of European empires to the entire world brought with it mercantilism and the need for nations to control their commercial activity, to enrich themselves and strengthen their States. Thus, trade took a great leap and eventually began to involve the flow of goods from one corner of the world to another, becoming an international activity.
The true globalization of trade came in the 20th century when the invention of the Internet and telecommunications allowed the buying and selling of goods and services in quick time throughout the planet.
Types of trade
There are different ways to classify commercial activity. First of all, we must distinguish the types of trade possible based on the volume of merchandise and its methods of sale, as follows:
- Wholesale trade. Also called “wholesale” or “wholesale”, it is a type of purchase and sale of merchandise in which large volumes of merchandise are handled at a reduced price, generally destined for resellers who will then proceed to retail trade, thus obtaining a profit.
- Retail trade. Also called “retail”, “retail”, “retail” or “retail”, it is, on the contrary, the purchase and sale of merchandise on a small scale, generally made directly to the final consumer.
On the other hand, we can distinguish between the forms of commerce based on the transportation mechanism used to transport the merchandise from the producer to its consumers, thus speaking of land, sea, air or river trade. Internet commerce is also known as e-commerce or e-commerce.
Finally, we must distinguish between:
- Domestic trade It is carried out between people who belong to the same country and share the jurisdiction of the State.
- Foreign trade It involves economic actors found in different countries.
Importance of trade
Commerce is a fundamental activity of humanity, largely responsible for the dissemination of knowledge, technologies, cultures, languages and religions that, since ancient times, thus enriching different human societies.
It has also been, along with production, one of the main economic activities of human beings to which we currently owe the largest volume of economic transactions in the contemporary world.
Commercial code
A commercial code It is a systematized and unified set of commercial law rules intended to regulate all forms of commercial exchange in a country, and which is part of its specific legal framework. These types of treaties arose from the French Enlightenment and specifically from the legal changes introduced by Napoleon Bonaparte.
Currently, commercial codes, together with certain special laws, allow regulating commercial exchange to guarantee its performance according to basic principles, which respect the fundamental laws of each society.
World Trade Organization
The WTO is an international organization based in Geneva, Switzerland, founded in 1995. Its mission is to administer a series of agreements between member nations.
So, guarantees that the exercise of international trade is carried out in the healthiest and fairest way possible thus helping producers and exporters of goods and services to integrate into the supply and demand of an increasingly economically globalized world.
It is made up of 164 different nations as well as by a group of observer nations, who act as impartial judges between the negotiations that take place within them. On the other hand, this organization is not part of the United Nations Organization or financial organizations such as the World Bank or the International Monetary Fund.
References
- “Trade” on Wikipedia.
- “Commerce” in the Language Dictionary of the Royal Spanish Academy.
- “Commerce” by Nuri Rodríguez and Carlos E. López in DerechoComercial.edu.uy (Uruguay).
- “Trade” in Economipedia.
- “What is the WTO?” in World Trade Organization.
- “World Trade Highlights” (2019) in World Trade Organization.
