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Shuttle trade

Trade associated with travel. A typical example of shuttle trade is when an individual entrepreneur or a representative of a small firm travels abroad with cash to buy goods, delivers these goods to the home country or to a third country, and sells them in a street market or through retail stores; cross-border trade is another example. At a significant scale shuttle trade recently existed only in the countries of Eastern Europe and of the former Soviet Union, although, historically, this may have been the original and the only form of trade everywhere in the world. Shuttle trade exploits arbitrage opportunities created by inefficient regulations and the failure of the formal trading system to respond to consumers’ needs. Because it is often unrecorded or under-recorded, shuttle trade in large volumes distorts the balance of payment statistics of the partner countries.

Reference: Oxford Press Dictonary of Economics, 5th edt.