barter

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Barter

The trading/exchange of goods or services without using currency.

Barter

To trade one item for another of roughly equal value. That is, bartering occurs without a medium of exchange like money. For example, one may trade 10 apples for 10 oranges. Bartering exists in all societies, though it is less common than monetary transactions. See also: Horizontal Security Exchange, Payment-in-Kind.

barter

an exchange mechanism for buying and selling goods and services which involves the physical ‘swapping’ of one product for another. Generally, barter is a cumbersome and inefficient means of organizing exchanges in an economy, since a large amount of time is wasted in seeking out and finding compatible ‘swap’ partners (i.e. each selling what the other wants to buy), and then haggling over an appropriate exchange rate (for example how many tomatoes equal a sewing machine?). All these difficulties can be overcome by the use of MONEY as a common denominator to conclude transactions and ‘price’ individual products.

For all its disadvantages, barter (or COUNTERTRADE as it is often referred to) is still widely used in the context of INTERNATIONAL TRADE. Firms which are unable to obtain the necessary foreign currencies they require to finance a trade deal (because the government operates FOREIGN EXCHANGE CONTROLS or because the country has simply run out of currencies due to a balance of payment deficit), often enter into a bilateral ‘swap’ deal with firms in other countries arranging a suitable product exchange.

barter

the EXCHANGE of one economic good or service for another. Barter as an exchange mechanism, however, suffers from a number of serious disadvantages:
  1. for barter to take place, there must be a ‘coincidence of wants’, that is, each party to the barter must be able to offer something that the other wants. For example, an apple-grower wishing to obtain oranges must not only find an orange-grower but must particularly find an orange-grower wishing to acquire apples. Finding appropriate exchange partners can involve lengthy search activity, which reduces the time available for actually producing goods;
  2. even if the parties meet up, they then have to agree on an appropriate ‘rate of exchange’, for example, how many apples are to be exchanged for one orange? Haggling over exchange terms is again time-consuming, and where agreement cannot be reached between the two parties each will then have to seek out new exchange partners.

Overall, barter is a very inefficient means of organizing transactions in an economy and has been largely superseded by the PRICE SYSTEM in modern economies, using money as a medium of exchange. See COUNTERTRADE, BLACK ECONOMY

References in periodicals archive ?
The special ecozone where barter trade is one of the economic activities has a deep socio-cultural objective that is linked with the intent to secure areas in Mindanao against transnational crimes and the threats of international terrorism," Alonto said.
In 2009- 10, when under- invoiced goods from Pakistan- occupied- Kashmir ( PoK) flooded markets in India -- a violation of the border- barter trade since goods should be traded locally -- Apesh Grag, a Delhi based businessman, raised an alarm.
The biggest problem in the region is that even today, we are involved in a barter trade system.
One said Malaysia is no longer keen to do barter trades after facing problems in a deal with North Korea in 2009 when $20 million worth of palm oil was to be exchanged for cash and fertiliser components.
Watana added that the idea conforms with the government's policy favoring more barter trade for state purchases worth more than 300 million baht.
Pakistan and Malaysia signed two agreements Friday providing for the construction of a liquid cargo terminal at Port Qasim on the Arabian Sea and a $50 million barter trade between two countries.
He had told Kyodo News in an interview in 1999 in Kabul that he was mostly involved in barter trade with former communist countries in Eastern Europe, particularly Poland, as well as Saudi Arabia and was operating Afghanistan's only private bank.
The government sees barter trade as one of the instruments to accelerate the country's export earnings.
Bartering has become a big growth business, one that's expected to grow into a $20-billion annual global business," says Brian Beal, Partner of Value Card Alliance, one of the US's fastest-growing barter trade exchanges.
He said the only option is barter trade, but its scope would be limited due to non-presence of banking channels.
He noted that that parallely, Iran buys rail to support its local infrastructure projects through a barter trade system with Turkey.
Russian Deputy Foreign Minister Sergei Ryabkov said in April that Moscow and Tehran had started barter trade through supplying Iran with Russia's grains, equipment and construction materials in lieu of Iran's crude oil.