(a) Define international track (b) Describe any five benefits of international trade (c) What four factors limit trade between African countries and the Uni...

Answer Details

(a) Definition of international trade

International trade is the exchange of goods and services between one country and another across national boundaries. It consists of imports (goods bought from other countries) and exports (goods sold to other countries).

(b) Five benefits of international trade

1. Provision of goods not produced at home: a country obtains raw materials, machinery and manufactured goods it cannot produce itself.
2. Earning of foreign exchange from exports, which is used to pay for imports and finance development.
3. Wider market for surplus produce: countries can sell their surplus goods abroad, encouraging greater production and specialisation.
4. Promotion of specialisation and efficiency: each country concentrates on what it produces best (comparative advantage), raising output and quality.
5. Fostering of friendship, cooperation and transfer of technology and skills between trading nations, and cheaper goods for consumers.

(c) Four factors that limit trade between African countries and the USA

• Similarity of exports: Africa mostly exports primary raw materials and the USA wants finished goods, so African countries have little the USA needs and cannot easily afford US manufactures.
• Long distance and high transport costs between the two, which raise the price of traded goods.
• Trade barriers such as high tariffs, quotas and strict quality standards imposed by the USA on African products.
• Weak currencies and shortage of foreign exchange in Africa, together with poor manufacturing capacity, limiting how much can be bought from the USA.

Also acceptable: differences in language/business practice, and unstable political conditions in some African countries.