Observation

Some candidates could not mention other benefit part from comparative cost advantage. The (b) part of the question was not well attempted too.

The expected responses to the question include:

         (a)      Benefits enjoyed by countries engaged in Foreign Trade

1. Foreign trade creates additional market for goods and services.
2. It makes it possible for countries to obtain goods they could not produce either because of lack of natural resources or capital.
3. It confers comparative cost advantage which encourages mass production of goods and services/specialisation.
4. Foreign trade creates Job opportunities for member countries
5. It generates more revenue for the nations involved.
6. It encourages inter-dependence among nations
7. Foreign trade facilitates the transfer of technology.
8. It fosters close economic ties and diplomatic relations among trading nations.

1. It increases variety/choice of goods and services thereby increasing standards of living.

 
(b)       Measures to correct unfavourable Balance of Payment

1.  Outright ban on imports to discourage importation of goods and services.
2. Drawing from foreign exchange reserves to offset the adverse balance of payment.
3. Export promotion- increase export of both visible and invisible goods (encouraging home/local production).
4. Devaluation of currency to attract foreign investors.
5. Borrowing from international financial institutions e.g. IMF(International Monetary fund).
6. Sale of a country’s asset or gold reserves
7. Exchange control regulation-  the amount of foreign exchange that could be held by citizens could be controlled.
8. Obtaining grants and debt cancellation from friendly countries can be used to offset unfavourable balance of payments.
9.  Reduction in importation of goods through the imposition of tariffs, quotas etc.
10. Promotion of import substitution industries.