FOREIGN TRADE.

Hey Guyz, It’s a Beautiful Tuesday- isn't it? How was your day yesterday and your rest yesterday, hope it was peaceful and lovely? I Pray in the name of Jesus that he grants you peaceful rest in all areas of your life- Amen. Now to the matter, we are back with Commerce 101 and we are focusing on the above named topic today, so let’s have fun.

Foreign Trade is the exchange of goods and services between two or more countries. It is when two countries have trading ties and commercial relationship of import and export. In other words, it is referred to as International Trade or External Trade. When Nigeria buys Automobile Cars from Germany, Foreign Trade has taken place.

MAJOR TYPES OF FOREIGN TRADE.

There are two main types of Foreign Trade, and they are:

1. Bilateral Trade.

2. Multilateral Trade.

BILATERAL TRADE.

Bilateral Trade is the exchange of goods and services between just two countries. Just like the example we gave earlier, about Nigeria buying Automobile Cars from Germany. It is bilateral trade.

MULTILATERAL TRADE.

Multilateral Trade is a type of foreign trade that occurs between more than two countries. For example, A trade between Nigeria, Togo, South Africa & Canada.

REASONS FOR FOREIGN TRADE.

1. Difference in Level of Skill and Technology- Leads to the desire of less developed countries to import what they can’t produce or don’t have.

2. Desire to Widen The Market- As a result of overproduction of goods and services by developed countries like USA, UK, CANADA ETC., the need arose to seek potential and interested buyers of their goods in order to encourage further production, employment for workers and avoidance of wastage.

3. Climatic Condition- The Climatic Condition of America and Nigeria are very different therefore agricultural produce will be different, so also for other countries.

4. Distribution of Natural Resources- This is one of the reasons foreign trade began, because some countries are naturally endowed like my country Nigeria, while others are not or have very little natural resources.

ADVANTAGES OF FOREIGN TRADE.

1. Foreign Trade encourages close relationship between countries.

2. In Foreign Trade, wide variety of goods and services are made available.

3. In Foreign Trade, Foreign Investors can establish firms in other countries which will create employment opportunities for the citizens of those countries.

4. In Foreign Trade, New Ideas, Skills and Techniques can be acquired to improve the quality of goods and services.

5. It is a source of Revenue for Nations of the world. For example, in my country it is responsible for at least 60% of our revenue.

6. It increases the standard of living of the people in the countries that produce these goods, and the countries that buy these goods too.

DISADVANTAGES OF FOREIGN TRADE.

1. It can lead to unemployment in the importer countries, because if the goods imported are cheaper it reduces the level of patronage of locally produced goods.

2. Harmful goods can be imported through Foreign Trade into a country by wicked, selfish businessmen.

3. Foreign Trade affects newly established industries negatively, as they cannot compete favourably with their well established foreign counterparts.

4. Importation of Goods like Films, Fashion etc, can destroy the moral value of a country.

This is concludes our session for today, hope you had fun and learnt as well. Remember the key to being better is constant reading and revision on your part. May God help you In Jesus Mighty Name- Amen.

Until we meet again remain ever blessed and remember you are for SIGNS & WONDERS. God Bless You.