(a) With specific examples give four reasons why countries exchange goods and services (b) Account...
(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 of Africa.
Explanation
(a) Four reasons why countries exchange goods and services
(i) Natural resources; Natural resources of the world are unevenly distributed e.g Nigeria's petroleum is sold to Brazil in exchange for vehicles, sugar and communication equipment.
(ii) Degree of Industrial Development; Due to high technical knowledge and expertise which a country has in the production of goods and electronic equipment than other countries e.g Japan specialises in the production of electronic equipment
(iii) Some crops are more suited to certain climatic condition. Crops like cocoa, cotton, etc, grow in tropical regions while crops like wheat, barley and oats grow well in temperate regions
(iv) Geographical Situation;Some countries have situations which enable them to take part in trade between contrasting economies e.g Singapore handles much of South East Asia's trade
(b) Reasons for low volume of trade between Nigeria and the rest of Africa are
(i) African countries produce goods which are very similar, leaving little or no room for exchange
(ii) Nigerians have a high taste for imported goods from foreign countries. These goods are not produced by other African countries
(iii) Nigeria's foreign exchange earnings from African countries is very low - about 20%
(iv) Prices of goods offered by African countries are usually very low compared with foreign countries
(v) African countries demand for very low quantity of goods unlike foreign countries.