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WEEK 4
TOPIC: INTERNATIONAL TRADE
CONTENT:
- Meaning of International Trade and Domestic Trade
- Differences between Domestic and International Trade
- Reasons for International Trade
- Theory of comparative costs and its shortcomings
- Globalization- Meaning, features, challenges and opportunities to the Nigerian Economy
Sub Topic 1 Domestic Trade and International Trade
Domestic or Internal Trade or Home Trade involve the exchange of goods and services among the residents of country. It includes all trading/selling and buying activities of all types within a particular country e.g. Nigeria.
International trade or External trade or foreign trade involves the exchange of goods and services between two or more countries. It is trade among nation. E.g. between Nigeria and other countries. People firms, government and agencies exchange goods and services across international boundaries.
International trade can be:
- Bilateral-trade involving exchange of goods and services among two countries. Each country balances its payments and receipt with each other.
- Multilateral-trade in which a country exchanges goods and services with many other countries.
Similarities between International trade and internal trade
- Both trades involve the use of money as a medium of exchange.
- Both have to do with some degree of specialization between the trading partners which is the basis of exchange.
- Both trades involves the buying and selling of goods and services.
- Both trades arise from inequitable distribution of natural endowments and production resources.
- Both trades involve the activities of middle men.
Differences between International Trade and Internal (domestic) Trade
- While International trade takes place across national boundaries, internal trade takes place within the borders of a country.
- Internal trade uses local or national currency whereas different currencies are used in foreign trade.
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