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By Leslie Ball


Early man economic life was all about direct exchange of goods for goods probably because wants were very limited and man could satisfy himself with all he produced. Nowadays, things are a bit complex and there is a need for international barter exchange since countries cannot do with the little resource they produce.

Countertrade is considered as a way to represent the joint world trading system as well as the economic welfare of the countries concerned. It is also believed to facilitate the development in most member countries. It is seen to eventually lead to increased world trade.

Exchanging goods or services eases the need of foreign exchange since no such revenue is used in the entire transaction. This simultaneously reduces the demand and supply of hard currency. High interest rates on foreign debts and reduced export prospects due to recession have contributed to shortage of hard currency hence considering this form of trade as their way out.

Barter exchanges are potentially valuable tool for expanding the customer base. It is a way of contacting and acquiring new customers. By developing mutual trust, companies eventually engage into serious business transactions between one another.

The global bartering helps the business to earn a retail value. This only happen only when incurring a valuable cost. For instance a hotel giving out its accommodation for this form of trade will incur expenses through cleaning services yet earn credit from retail value for the rooms.

Barter trade is normally used when a country is a foreign currency is in short of supply or when a country apply foreign exchange control procedures. These include the limits imposed on the availability of foreign currencies to importers for the purpose of purchasing a foreign product.

Bartering is ideal for companies and businesses who want to drop off some of their excess goods with a financial benefit in return. They can trade their goods and services which add value to their business at large. This will help them increase their returns as well as achieving their organizational goals.

The economy of the foreign country purchasing the goods benefits from the direct offset but the purchaser does not necessarily benefit. The main objective is to eliminate the trade imbalance between importing and exporting countries. Both of the countries take advantage of its products to improve its economy at large.

The other form of barter trade is the indirect offset. It does not involve the same trade transaction. It occurs when a foreign government is in need of an importer for a long term investment in the country's economy. Other forms of global bartering includes the switch trading. This is where at least three countries are involved in a trade. The third country buys what the second country needs from the first one in exchange of a product it require, finally the three benefit from the trade.




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