Why Do People Trade?
Why People Trade
- Trading has existed since ancient times.
- People trade to obtain items they cannot produce themselves.
- Example: Swapping pencils for sharpeners.
Key Vocabulary
- Trade: Exchanging, buying, and selling something for something else.
- Exchange: Giving something and receiving something in return.
- Barter: Trading or exchanging without using money.
Trade as an Exchange of Goods
- Early trade involved simple exchanges of goods (barter).
- Bartering was common before the invention of money.
- Bartering was sometimes ineffective (disagreement on value).
- Around 5000 BC, metal objects were introduced as currency.
- Metal was accessible, easy to work with, and recyclable.
- Standard values assigned to coins made it easier to trade.
Imports and Exports
- Imports: Goods brought in from other countries.
- Exports: Goods sent out from a country to sell abroad.
- Trade occurs not just between individuals but also between countries and businesses.
- Governments earn tax revenue from these transactions.
Exports from South Africa
- Exports include diamonds, gold, metals, machinery, and equipment.
- Countries export due to:
- Abundance of natural resources
- Cheaper labor costs
- Higher quality goods
Imports to South Africa
- Imports include chemicals, oil, scientific instruments, food, and machinery.
- Countries import when they can't produce goods or can buy them cheaper from others.
- Exporting more than importing helps governments to invest in public services like education and healthcare.