(a) What is foreign trade? (b) Explain four ways by which foreign trade is different from home trade. (c) State five reasons why countries restrict foreign ...

Answer Details

(a) What is foreign trade?

Foreign (external) trade is the buying and selling of goods and services between one country and another. It includes import trade, export trade and entrepot (re-export) trade.

(b) Four ways foreign trade differs from home trade

(c) Five reasons why countries restrict foreign trade

1. To protect infant (young) home industries from foreign competition.
2. To reduce a deficit in the balance of payments.
3. To raise government revenue through import and export duties.
4. To prevent the importation of dangerous or harmful goods.
5. To conserve scarce foreign exchange and prevent dumping of foreign goods.