(a) With specific examples give four reasons why countries exchange goods and services (b) Account for the low volume of trade between Nigeria and the rest ...

Answer Details

(a) Four reasons why countries exchange goods and services (with examples)

1. Uneven distribution of resources: a country sells what it has in surplus and buys what it lacks. Nigeria sells crude oil and buys machinery it does not produce.
2. Differences in climate and soils: countries import produce they cannot grow. Britain imports cocoa and coffee from the tropics; Nigeria imports temperate wheat.
3. Differences in technology and industrial development: less industrialised countries import manufactured goods from advanced ones. Nigeria imports vehicles and electronics from Japan, Germany and China.
4. Comparative cost advantage and specialisation: each country produces most cheaply what it is best suited for and trades for the rest, and services such as shipping, banking and tourism are also exchanged.

(b) Reasons for the low volume of trade between Nigeria and the rest of Africa

1. Similar (competing) economies: most African countries export the same primary products (cocoa, oil, minerals) and want to buy manufactures from outside, so they have little to sell one another.
2. Poor transport links between African countries: roads, railways and shipping lines were built to carry goods to Europe, not across Africa, so movement of goods within the continent is slow and costly.
3. Colonial trade ties and currency differences: long-standing links bind each country to former colonial and overseas partners, and different, non-convertible currencies plus trade barriers hamper intra-African trade.
4. Low levels of industrialisation and small purchasing power, together with language differences, political instability and smuggling, keep official trade among African states low.