Commerce, trade and aids to trade
Commerce · WAEC and JAMB · SS2 and SS3
The framing topic. Every other part of the syllabus is either trade itself or one of the services that makes trade possible.
What you need to know
- Commerce = trade + aids to trade. Trade is buying and selling; aids to trade remove the obstacles.
- The six obstacles and their aids: place (transport), time (warehousing), risk (insurance), finance (banking), knowledge (advertising), person (middlemen).
- Home trade is within a country: wholesale and retail. Foreign trade crosses borders: import, export and entrepot.
- Entrepot trade is importing goods in order to re-export them, often after minor processing.
- Production has three stages: primary (extractive), secondary (manufacturing and construction), tertiary (services).
- Commerce belongs to the tertiary stage — it distributes rather than creates physical goods.
Key terms
- Entrepot trade
- Importing goods for the purpose of re-exporting them rather than for domestic use.
- Balance of trade
- The difference between the value of visible exports and visible imports.
- Invisible trade
- Trade in services such as banking, insurance, shipping and tourism.
The mistake to avoid
Mining, farming and manufacturing are INDUSTRY, not commerce. Commerce distributes what industry produces.
In the exam
When asked to list aids to trade, give the aid and say what obstacle it removes. "Insurance — removes the obstacle of risk" is a complete answer.