Pakistan Studies

Importance of Trade and Commerce Activities

No person or a state is self sufficient, they need to trade with others.

In this article, I will discuss the importance of trade and commerce activities in the economic development of any society or country.

Human beings are social animals as the great philosopher, Aristotle has said thousands of years back. They cannot live in isolation. Social interaction and mutual existence is important for survival. In this regard, the exchange of goods and services to fulfill different needs of life, known as trade in the language of economics, is one of the manifestations of much needed social interaction between human beings. To make a trade happen, commerce activities i.e. publicity, transportation, government regulation, etc. play a pivotal role.

What is the importance of trade and commerce?

Trade and commerce are very important to meet the different needs of human beings as discussed below:

Specialization of production

Trade helps people of an area or a country to specialize in the production of certain goods and services. These goods and services are exported to earn foreign exchange.  For example, Pakistan is famous for cotton products and sports goods in the world, China and Japan for electronics, and Saudi Arabia for oil.  There are many factors for the specialization of goods i.e. availability of raw material, technological development, labor skills, etc. These factors vary from country to country; hence the specialization of goods also varies from country to country.


Trade promotes industrialization which means the establishment of different industries to increase the production of a variety of goods and services. An increase in production helps meet local needs whereas an increase in exports helps earn the foreign exchange needed to import goods and services which a country does not produce.  When industrialization kicks off, the utilization of local resources is maximized which otherwise would have remained unused.

Achievement of Economies of scale production

The need for increased exports leads to production on a large scale. Large-scale production creates a condition in which quality and cheap goods and services become available at the local level. This achievement of large scale production providing people access to cheap and quality products is called Economies of scale.

Creation of employment opportunities

International Trade encourages economic activities i.e. commerce activities, industrialization, etc. creating job opportunities for local people. Job opportunities help mitigate poverty and increase the living standard of people.

Transfer of Technology to the under-developed world

International trade helps the transfer of technology and managerial skills from developed countries to developing and underdeveloped countries. The developing countries with the import of technology can enhance their economy. For example, Pakistan is an agricultural country with a small industrial base. Pakistan has been importing capital machinery, computers, mobiles, and technology used in different departments of life from other countries. Without foreign trade, it would not have been possible to meet these needs of the country.

Increase in national income

Through international trade, countries increase their national income. For this, they focus on an increase in the quantity and quality of the products they manufacture. One of the ways to earn more and more income through foreign trade is by concentration on the production of value-added goods. This is because manufactured goods have more value than processed goods and raw materials.

Content Generator

I am a social activist and educationist. I write on politics, culture, education and economy.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also
Back to top button

You cannot copy content of this page