GEOGRAPHY ASSIGMENT section: 4

NAME ID NO
1. Eyob ayele------------------------ 0632
2. Mintesnot bizualem------------ 0743
3. Mikiyas ------------------------
4. Nafiyad tayib--------------------- 0767
5. Mignot dagnachew ------------- 0728
6. Nebiyu esayas -------------------- 0777
7. Miliyon Getachew --------------- 0738
8. Muluken gebeyehu -------------- 0759
 Topic of content
Preface---------------------------------------------------------------------

Chapter one -------------------------------------------------------------- 1

Introduction--------------------------------------------------------------- 1

1.1 Definition of trade----------------------------------------- 2

1.2 Types of trade---------------------------------------------- 3
1.3 Ancient trade & modern trade------------------------- 4
1.4 Trade in Ethiopia------------------------------------------- 6
1.5 External (international) trade--------------------------- 7
1.6 Difference between internal & external trade------ 8
1.7 Import--------------------------------------------------------- 9
1.8 Export--------------------------------------------------------- 10
1.9 Impoet and Export in Ethiopia-------------------------- 11
1.10 What is trade balance------------------------------------- 12
1.11 Trade balance of Ethiopia------------------------------ 13

1.1 Definition of trade

 Trade is a basic economic concept involving the buying and selling of
goods and services, with compensation paid by a buyer to a seller, or the
exchange of goods or services between parties. Trade can take place
within an economy between producers and consumers. International
trade allows countries to expand markets for both goods and services that
otherwise may not have been available. It is the reason why an American
consumer can pick between a Japanese, German, or American car. As a
result of international trade, the market contains greater competition and
therefore, more competitive prices, which brings a cheaper product home to
the consumer. Trade is essential for satisfaction of human wants, Trade is
conducted not only for the sake of earning profit; it also provides service to the
consumers. Trade is an important social activity because the society needs
uninterrupted supply of goods forever increasing and ever changing but never
ending human wants. Trade has taken birth with the beginning of human life and
shall continue as long as human life exists on the earth. It enhances the standard of
living of consumers. Thus we can say that trade is a very important social activity.

 Trade broadly refers to the exchange of goods and services, most often
in return for money.
 Trade may take place within a country, or between trading nations. For
international trade, the theory of comparative advantage predicts that
trade is beneficial to all parties, although critics argue that in reality, it
leads to stratification among countries.
  Economists advocate for free trade between nations, but protectionism
such as tariffs may present themselves due to political motives, for
instance with "trade wars.

1.2 Types of trade

1. Internal Trade

Internal trade is also known as Home trade. It is conducted within the political and geographical
boundaries of a country. It can be at local level, regional level or national level. Hence trade carried on
among traders of Delhi, Mumbai, etc. is called home trade.

Internal trade can be further sub-divided into two groups,

Wholesale Trade : It involves buying in large quantities from producers or manufacturers and selling in
lots to retailers for resale to consumers. The wholesaler is a link between manufacturer and retailer. A
wholesaler occupies prominent position since manufacturers as well as retailers both are dependent
upon him. Wholesaler act as a intermediary between producers and retailers.

Retail Trade : It involves buying in smaller lots from the wholesalers and selling in very small quantities
to the consumers for personal use. The retailer is the last link in the chain of distribution. He establishes
a link between wholesalers and consumers. There are different types of retailers small as well as large.
Small scale retailers includes hawkers, pedlars, general shops, etc.

2. External Trade

External trade also called as Foreign trade. It refers to buying and selling between two or more
countries. For instance, If Mr.X who is a trader from Mumbai, sells his goods to Mr.Y another trader
from New York then this is an example of foreign trade.

External trade can be further sub-divided into three groups, viz.,

Export Trade : When a trader from home country sells his goods to a trader located in another country,
it is called export trade. For e.g. a trader from India sells his goods to a trader located in China.

Import Trade : When a trader in home country obtains or purchase goods from a trader located in
another country, it is called import trade. For e.g. a trader from India purchase goods from a trader
located in China.

Entrepot Trade : When goods are imported from one country and then re-exported after doing some
processing, it is called entrepot trade. In brief, it can be also called as re-export of processed imported
goods. For e.g. an indian trader (from India) purchase some raw material or spare parts from a japanese
trader (from Japan), then assembles it i.e. convert into finished goods and then re-export to an american
trader (in U.S.A)

1.3 Ancient trade & modern trade

 Ancient Trade

More than half of the world’s population of 7 billion lives on a paltry $2 per day (or less) and
comes from developing (read poor) countries. This segment still buys and sells through
traditional means of trading, which has been stagnant for quite a few decades now. This
populace still buys items in retail stores, which are far smaller and much less sophisticated
than the glitter and technology of modern retailing. The word traditional trade is collective
representation of these small, simple stores.

Traditional trade also includes roadside vendors and food stalls on highways, cities and
villages in all parts of the world. All markets in cities having single shops also come within
the purview of traditional trade. There are countless examples of people opening up shops
in the garage, or in the front section of their homes to do retailing in the traditional manner.
  Modern Trade

All big retail chains in the form of hyper stores and malls coming up in middle class
cities after they have saturated in metro cities of countries like India, China, Brazil,
Indonesia, and of course the developed world represents modern trade around the
world. The big change to retail has come through multi-brand shops in malls and the
way businesses are conducted; electronically on the net, with far less constraints of
space and infrastructure. The marketing and supplying these electronic stores and big
malls is totally different from the demand and supply chain of the traditional markets.

1.4 Trade in Ethiopia

Ethiopia runs consistent trade deficits due to small production of exportable goods and
logistic difficulties. Main exports are gold, coffee, live animals and oilseeds. Ethiopia
is a net importer of fuel, foodstuffs and textile apparel.

Export value of Ethiopia:-

Ethiopia export values of both the years show decline in the growth of the trade to
outside countries by the percentile of 46% ($1.3 Billion). East-African country is ranked
at 28th position as per Ethiopia trade data and International Trade data.

1.5 External (international) trade

International trade is referred to as the exchange or trade of goods and services between
different nations. This kind of trade contributes and increases the world economy. The most
commonly traded commodities are television sets, clothes, machinery, capital goods, food, raw
material, etc.
International trade has exceptionally increased, which includes services such as foreign
transportation, travel and tourism, banking, warehousing, communication, distribution, and
advertising. Other equally important developments are the increase in foreign investments and
production of foreign goods and services in an international country.
These foreign investments and productions help companies to come closer to their international
customers, thus serving them with goods and services at a very low rate.

Points of Internal Trade External Trade

differnces
Meaning It refers to buying and selling of Trading globally or trade
Goods and service within the between two or more nations is
Nation. known as international business
external trade.
Countries There is only one country In this, a minimum of two
involved in buying selling. countries involved.
Risk Less risk involved. There is a high-risk involvement.
Currency Payments are in made in the
home currency. Foreign currency is used for
the buying and selling of
products and services.
Mode of Cash or credit is used in internal
Payment trade. Payments are made by Bills
of exchange and through
the bank.
Mode of Rodways, railways, are used
Transportation fore moving products from one Waterways-(sea
place to another. transport), Airways are
used
Cost Oprating cost is lower.
It involves long-distance
which results in higher
cost.
Types Wholesale trade and retail trade
Import, Export and
entrepot.
All the mentioned activities are parts of international business. It can be concluded by saying
that international trade and production are two aspects of international business, which is
growing day by day across the globe.

1.6 Difference between internal & external trade

Chart of difference between Internal trade and external trade.

Trade is referred to as an economic concept that is involved with buying and selling of goods.
Trade is conducted between two or more parties which can be an individual or a business entity.
Trade can be of two types : 1) Internal Trade and 2) External Trade
Internal trade is the trade that is conducted between parties within the political and geographical
boundaries of a nation, while external trade is the trade that is conducted between two parties
that are outside the nation’s borders or between two countries.

1.9 Impoet and Export in Ethiopia

 Import
 Main impoerts from Ethiopia:-
Ethiopia’s most popular import products include machinery, vehicles, electric
machinery, mineral fuels, oil, iron, steel, cereals, plastic articles,
 animal/vegetable oils, and pharmaceuticals. Imported plastics are the fastest
growing import category, with an increase of 14.6 % from 2016.

 Export:-
In 2019, Ethiopia exported a total of $3.11B, making it the number 132 exporter in the
world. During the last five reported years the exports of Ethiopia have changed by -
$479M from $3.59B in 2014 to $3.11B in 2019. The most recent exports are led by
Coffee ($837M), Other Oily Seeds ($347M), Gold ($256M), Cut Flowers ($238M), and
Zinc Ore ($199M)

 Coffee
Coffee is the 117th most traded product in the world consumed by people located in all
corners of the planet. Ethiopia has been growing coffee for centuries, and it is the
birthplace of Coffea Arabica. Up to 15 million people rely on coffee production for their
daily sustenance. Ethiopia exported coffee worth $881 million in 2016/2017 with
America being its biggest market. The export increased 13.5% from the previous period,
and it is currently Africa’s largest producer of the commodity.

 Oil Seeds
Ethiopia grows high-value oilseeds that are coveted around the world,
and are in high demand. The seeds produced in Ethiopia include
sesame seeds, mustard, pumpkin, sunflower, rapeseed, castor seed,
and groundnuts. Oilseeds accounted for $446 million in exports for the
year 2017.

 Live Trees And Flowers

Tree and flower cuttings have been in high demand in the world, and Ethiopia
has been able to meet this opportunity by growing the products individually for
export in many parts. These range from ornamental foliage, bulbs, roots and cut
flowers. Ethiopia earned $221 million from the trading of tree and flower cuttings
in 2017.

1.9 What is trade balance:-

The trade balance is also the biggest part of the current account. It measures
a country's net income earned on international assets. It's the trade balance plus
any other payments across borders.

The trade balance is the net sum of a country’s exports and imports of goods

without taking into account all financial transfers, investments and other financial
components. A country's trade balance is positive (meaning that it registers a
surplus) if the value of exports exceeds the value of imports. Conversely, a
country's trade balance is negative, or registers a deficit, if the value of imports
exceeds that of exports. The trade balance is the official term that is used for net
exports in the current account.

 Trade balance of Ethiopia

The statistic shows Ethiopia's trade balance of goods from 2010 to 2020. Trade
balance is the value of exported goods minus the value of imported goods.
A positive trade balance signifies a trade surplus, while a negative value signifies
a trade deficit. In 2020, Ethiopia's trade deficit amounted to around 9.86 billion
U.S. dollars. he statistic shows Ethiopia's trade balance from 2010 to 2020.
Trade balance is the value of exported goods minus the value of imported goods.
A positive trade balance signifies a trade surplus, while a negative value signifies
a trade deficit. In 2020, Ethiopia's trade deficit amounted to around 10.66 billion
U.S. dollars.

Ethiopian balance of trade.