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ABSTRACT
Sometimes known as barter, countertrade has been a trading method for thousands of years. In its original form, which is still used, it consists of the exchange of goods and services without the transfer of money, wholly or in part.
As trade and finance have become more complex, forms of countertrade have become more elaborate. Countertrade is particularly useful for countries with limited financial resources. This paper briefly describes some of the major forms of countetrade together with some advantages and disadvantages.
INTRODUCTION
Countertrade is a very old form of trade and in its simplest form is an exchange of goods or services between two trading entities in which money is not used or only partly used as a means of payment. Usually, but not always, the trading entities are in different countries.
Countertrade has a long history reaching back to the times before money existed, and it has over the years become increasingly complicated. The advent of currency exchange rates or of money as a commodity has made countertrade more attractive to companies in countries with weak currencies. Count ert is becoming of increasing importance, espe, to developing countries, which have a shortage of hard currency.
FORMS OF COUNTERTRADING
The term barter is sometimes used synonymously with counte but is really countertrade in its simplest form. It consists of a simple swap of goods by two parties. Countertrading is often used by companies with credit constraints even in developed countries.
Countertrade takes many forms, some quite complex and quite involved in financial transactions. It is also subject to taxation which can lead to negotiations and with governments. It is subject to the same trade laws and restrictions as those which govern the import and export of merchandise such as dumping. Countertrade transactions are not always simple and can take many forms. The -most common categories are:
Barter.
Barter is a simple ion with little or no exchange of money and is probably the oldest form of countertrade. It is usually conducted between two parties although a third party can be included, making it a three-- way transaction. Even more complex transactions sometimes take place involving four or even more entities.
The exchange of goods takes place simultaneously or within a...