What do you mean by counter trade?
Countertrade is a reciprocal form of international trade in which goods or services are exchanged for other goods or services rather than for hard currency. This type of international trade is more common in developing countries with limited foreign exchange or credit facilities.
What are examples of countertrade?
These include:
- Barter/swap,
- Counter purchase,
- Compensation/buy‑back,
- Clearing arrangements/switch trading, and.
- Offsets.
What is counter trade PDF?
One of the first definitions of countertrade states that it is a “variety of trade. arrangements in which a seller provides a buyer with deliveries, and contractually. agrees to purchase goods from the buyer equal to an agreed percentage of the original.
What are the advantages of counter trade?
Other frequently-cited “advantages” of countertrade trade are dubious, superficial or even incorrect: obtaining better terms of trade, automatic balance of payment equilibrium, risk-aversion and risk-shifting on behalf of Socialist decision makers, reduction of problems created by protectionism in the West, and …
What are the characteristics of counter trade?
The common characteristic of counter- trade arrangements is that export sales to a particular market are made conditional upon undertakings to accept imports from that market. For example, an exporter may sell machinery to country X on condition that he accepts agricultural products from X in payment.
Why some countries still use counter trade?
Regardless of the complexity, companies still use countertrade as a strategy for growth because it: Allows for entry into difficult markets. Increases company sales where you might not otherwise have business. Overcomes credit difficulties.
What are the needs of counter trade?
Companies engage in countertrade for three main reasons: (1) to satisfy a foreign-government mandate, (2) to hedge against price and currency fluctuations, and (3) to repatriate profits from countries that limit the amount of currency that can be taken out of the country.
Who introduced counter trade in Nigeria?
Counter-trade was introduced by the government led by Ibrahim Babangida.
Which is not part of counter trade?
If we lived in Japan, we’d measure GWP using Japanese currency, yen (¥). However, when we measure global trade only in terms of currency-based transactions, we omit a portion of the market known as countertrade. The most common form of countertrade is bartering.
What are the factors responsible for counter trade growth?
Many companies in the advanced countries have resorted to counter trade for various reasons like selling obsolete products, increasing the sale of capital goods, increasing the aggregate business etc. Counter trade has also been resorted to by several companies to mitigate the effects of recession.