Overview
Today's lecture covered the concepts of business, focusing on internal and foreign trade, the current status of Nepal's foreign trade, challenges faced, and possible solutions. It also highlighted the importance of trade for Nepal's economic development.
What is Business?
- Business is the buying and selling of goods and services to earn profit.
- A businessman sells goods, while a customer buys goods.
- Business meets needs that cannot be fulfilled at home.
Types of Business
- Internal (Domestic) Trade: Conducted within a country's borders.
- Foreign (International) Trade: Trade between two or more countries.
Internal vs. Foreign Trade
- Internal trade involves distribution of goods within Nepal from one area to another.
- Foreign trade means importing goods from and exporting goods to other countries.
- Nepal’s main foreign trade partners are India and China.
- Domestic trade distributes local products like milk, vegetables, and ghee.
- Foreign trade connects Nepal with the world market and allows access to goods not produced locally.
Current Status of Foreign Trade in Nepal
- Nepal imports more than it exports, mainly from India and China.
- Major exports: tea, carpet, herbs, pashmina, handicrafts.
- Major imports: petroleum products, machinery, electronics, vehicles, gold, medicine.
- Trade deficit exists as imports exceed exports.
Importance and Benefits of Foreign Trade
- Provides access to goods and technology not produced domestically.
- Generates employment in production, transportation, and sales.
- Expands markets for domestic products.
- Supports industrial sector growth through imported machinery and raw materials.
- Connects Nepal to global markets and supports economic development.
Challenges in Nepal’s Foreign Trade
- Trade deficit due to high imports and low exports.
- Low competitiveness and quality of Nepali products compared to foreign goods.
- Over-reliance on agricultural imports despite being an agricultural country.
- Export of raw and half-processed products instead of finished goods.
Solutions and Recommendations
- Modernize and industrialize agriculture to increase domestic production.
- Promote use of alternative energy (hydro, wind, solar) to reduce petroleum imports.
- Improve quality and quantity of domestic industrial products.
- Encourage production of finished goods for export rather than raw materials.
- Support small industries and analyze demand in foreign markets.
Key Terms & Definitions
- Business — Buying and selling goods and services for profit.
- Internal Trade (Domestic Trade) — Trade carried out within a country's borders.
- Foreign Trade (International Trade) — Trade between different countries.
- Import — Goods bought from another country.
- Export — Goods sold to another country.
- Trade Deficit — When the value of imports exceeds exports.
Action Items / Next Steps
- Identify products in your home or local store that are imported and those made in Nepal.
- Write answers to textbook exercise questions based on today’s lesson.
- Prepare three suggestions for reducing Nepal’s trade deficit for discussion in the next class.