Explanation

(a)  Benefits enjoyed by countries engaged in Foreign Trade

• Foreign trade creates additional market for goods and services.
• It makes it possible for countries to obtain goods they could not produce either because of lack of natural resources or capital.
• It confers comparative cost advantage which encourages mass production of goods and services/specialisation.
• Foreign trade creates Job opportunities for member countries
• It generates more revenue for the nations involved.
• It encourages inter-dependence among nations
• Foreign trade facilitates the transfer of technology.
• It fosters close economic ties and diplomatic relations among trading nations.
• It increases variety/choice of goods and services thereby increasing standards of living.

(b)  Measures to correct unfavourable Balance of Payment

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

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