COMMERCE

Commerce-Commerce is a social science associated with trade and aids to trade.

It is the sum total of those processes which are engaged with removal of hindrances of
persons, place and time in the exchange of commodities.

Growth of commerce

These days commerce plays the fundamental role with the satisfaction of human wants.
In primitive societies, the producer himself was the consumer. It came a time when
human wants increased in size and number and number and man would no longer
satisfy all his wants with goods produced with his labour alone. He began exchanging
commodities produced by the other.
The exchange of goods for goods was known as barter system.
With the advent of industrial revolution and the consequent introduction of machinery the
division of labour became more popular.
Different individuals and localities specialized in the production of different commodities.
The process of exchange was further accelerated by scientific inventions leading to
improved means of transport by land, water and air.
The exchange of commodities between countries separated by long distances became
possible.
Another factor that facilitated the growth/ development of commerce was was the
introduction of money as a media of exchange.

Factors that have played important role in the growth of commerce

i. The diversification of natural resources encouraged the exchange of goods between
countries or areas.
ii. The difference in human wants also induced the exchange of goods.
iii. Specialization or division of labour became another main cause of trade or
exchange of goods.
iv. Improvement of transport or communication system was also a great help in the
expansion of commercial activities.
v. Development of money and banking system was another factor for greater
production and exchange activities.

Importance of commerce
 Commerce helps in exploitation of natural resources that would have remained
un-exploited.
 Commerce helps in production of goods and services that satisfies human wants.
 Commerce helps in creation of employment in the society.
 Commerce activities acts a source of revenue for the government.eg revenue
collected from taxes, customs and duties.
 Commerce helps to improve our standards of living which is the quality of life
enjoyed by the members of the society.

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  Commerce links producers to consumers. This is possible through retailers,
wholesalers and also thro aids to trade.
 Commerce has greatly influenced globalization. It has made distribution and has
led to movement of goods from one part of the world to the other one.
 Commerce increases national income and wealth-when production increases,
national income also increases. It helps to earn foreign exchange by way of
exports and duties levied on the imports.
 Commerce helps in the growth of industrial development-Commerce looks after
the smooth distribution of goods and services made available by the industry.
 Commerce helps in the expansion of aids to trade-Aids to trade such as banking,
communication, advertising, publicity, transport, insuarance are expanded and
modernized for the smooth conduct of commerce.

Scope and branches of commerce

COMMERCE

TRADE AIDS TO TRADE

Home Trade/ Foreign or Banking

Domestic trade International
trade
Warehousing

Wholesale Retail Import Export

Insurance

Transport

Advertising
There are two major branches of commerce.
i. Trade
ii. Aids to trade.

i). Trade
Is the buying of goods and services with the aim of making profit. There are two
types of trade:
a) Home trade
b) International trade or foreign trade.

a). Home trade- This buying and selling of goods and services within the
geographical boundaries of a given country. Home trade is further classified into two
categories:
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  Retail trade
 Wholesale trade
 Retail trade- refers to selling of goods and services direct to final consumers in
small quantities by the retailers.
 Wholesale trade-refers to selling of goods to retailers in large quantities.

b).Foreign trade or international trade- This refers to buying and selling of goods and
services between a country and another or country and other countries.
Foreign trade is further classified into two:
 Export trade
 Import trade
Export trade- Refers to selling of goods and services by one country to another or
several other countries.
Import trade-Means the purchase (buying) of goods and services by one country from
another country.

ii).Aids to trade
These are also referred to as auxiliary services. They help trade to run smoothly.
Aids to trade include services like;
i. Transport-Refers to movement of goods and passengers from one place to
another either through water, land and air.
ii. Communication-It is an act of natural or artificial means of means of conveying
information. Example radio, television.
iii. Banking-It assists the trade by safeguarding the traders money and investments
by providing banking services.
iv. Warehousing-These stores the goods so that they are available when and where
they are required. A warehouse protects the goods from being stolen, going bad
etc.
v. Advertising-This is creating awareness about certain goods and services.
vi. Insuarance- These are firms that protects the investors from incurring looses from
the risks covered.

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