Understanding Trade, Transport, and Economic Balances

Trade involves the purchase and sale of goods in order to meet the needs of the population. This former activity has allowed contact between cultures. Subsequently, with the onset of currency, it was possible to give a more accurate value to goods.

Domestic Trade

Domestic trade takes place within a country.

• Wholesale: Carried out by wholesalers who purchase large quantities of goods, sold to producers and other traders.
• Retail: Involves selling small quantities directly to the public.

Foreign Trade

Foreign trade is what a country conducts with other countries, involving exports and imports.

The Trade Balance

The trade balance is the difference between the value of goods a country sells abroad and the value of goods it buys from other countries:

• If the value of purchases of goods abroad is lower than the value of sales made to other countries, the trade balance is positive.
• When imports exceed exports, the trade balance is negative.

Balance of Payments

The balance of payments records all of a country's economic transactions, including material goods, services, and financial assets.

• When the balance of payments is in surplus, revenues exceed expenses.
• When revenues are smaller than costs, the balance of payments is deficient.

Characteristics of Current Trade

• Moves huge amounts of very different products because of the concentration of population and productive activities.
• Creates a network of relationships worldwide.
• Is an activity that, along with transport, employs many people.
• Shows a growing concentration in a few companies.

Trade Blocs

The globalization of trade has forced many countries to eliminate trade barriers and group together to regulate flows and counter rivalries. Key aspects include:

• Spatial proximity
• Customs union
• Industrial redistribution
• Addressing Fronts
• Complementarity and joint effort

Transport

Transport is the activity by which a person or commodity is transferred from one place to another. There are three types of transport: land, sea, and air. Roads, railways, ports, and airports are necessary infrastructures for the circulation of means of transport.

Transportation Revolution

• Increased tonnage
• Intermodality
• Increased speed
• Improving road infrastructure
• Increased security
• Reducing the cost of transport
• Advances in telecommunications

Road Transport

Road infrastructure is most often used to transport people and goods. It has, for years, pushed other forms of displacement due to the high mobility of vehicles.

Air Transport

Air transport is suitable for long distances and light freight. It is expensive because planes consume much fuel. Airports require large spaces for air transport to be effective.

Sea Transport

Sea transport is the ideal way to move heavy or dangerous goods very far. One of the disadvantages of shipping is its slowness, so it is very little used for carrying passengers.