Describe countertrade. What are its major advantages to a manufacturer from a developed country with a pegged currency? What are the major disadvantages?
Countertrade is international trade by the exchange of goods rather than by currency. Basically you are trading product for product, not giving money for a product. One advantage of this is that you can get something that you need instead of money, which saves you a trip, time, and effort. Also, if the person needs a product bad enough they may be willing to give something that has more value than money. If a country with pegged currency countertraded they could receive more value. Some disadvantages are that it can be more complex than exchanging money for the product, there is more debate and back and forth trying to decide what the value is, you are not receiving money which is the main point of the business.