Countertrade as a Reaction to Lack of Liquidity

Abstract

This research-in-progress is about one of the most prevalent forms of countertrade, a phenomenon which has received considerable attention in recent years. The review of the relevant literature is presented in terms of a theoretical framework similar to the one developed by Verzariu (1987). In so doing, the paper attempts to point out clearly the gaps in the literature. Since there are important differences among various forms of countertrade each countertrade deal should be examined individually (Hennart, 1990). This study singles out “international barter” as the form of countertrade to be investigated. Among the motivations for international barter, perhaps the most frequently mentioned is the lack of liquidity: “When the money game is impossible, countertrade remains the only game in town” (Samonis, 1990 p.121).