State trading is resorted to for a number of reasons. TRUE OR FALSE?

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justaguide eNotes educator| Certified Educator

The statement : "State trading is resorted to for a number of reasons," is true.

With an increase in liberalization and a movement towards a free market creation in which all nations can compete on equal terms. most import and export of goods is now being done directly by private companies or the manufacturers. Though the reliance on state trading enterprises has reduced they continue to exist and play an important role in the trade of many commodities.

The WTO defines state trading enterprises as

Governmental and non-governmental enterprises, including marketing boards, which have been granted exclusive or special rights or privileges, including statutory or constitutional powers, in the exercise of which they influence through their purchases or sales the level or direction of imports or exports.

These enterprises are present in almost all nations and are created by the government to make it easier for smaller companies to be able to export their products or procure raw materials from other nations without having to spend too much of their own resources.

As state trading enterprises represent a large number of buyers and sellers it increases their negotiating powers and they are also more efficient in shipping products and carrying out other tasks essential during import-export.