What five factors determine the volume of trade between Nigeria and Ghana

Answer Details

Five factors that determine the volume of trade between Nigeria and Ghana

• Range and differences in products: trade is larger when each country produces goods the other needs (complementarity). If both produce similar goods (cocoa, oil palm) there is little to exchange, reducing trade.
• Nature and cost of transport: the availability, efficiency and cost of road, sea and air transport linking the two countries affects how easily and cheaply goods can be moved, and so the volume traded.
• Government policy and trade barriers: tariffs, import/export duties, quotas, border restrictions and ECOWAS agreements encourage or discourage the flow of goods; free-trade arrangements raise the volume.
• Currency and purchasing power: the exchange rate and convertibility of the naira and cedi, and the level of income/demand in each country, determine how much each can afford to buy.
• Political relations and stability: good, peaceful relations and stable governments promote trade, while political disputes, border closures or insecurity reduce it.

Other acceptable factors: distance between the trading centres, and the size of population/market in each country.