2016 WAEC Commerce Theory a) What is entrepôt trade?   b) State three advantages and three disadvantages of international...

a) What is entrepôt trade?

b) State three advantages and three disadvantages of international trade

(a) Entrepôt trade involves the importation of goods from one country and re-exportation of the goods to another country.

(b) (i) Advantages of International Trade:

International trade widens the market for goods;
It avoids wastage because countries can dispose off the goods they have in excess;
It improves the standard of living because countries can enjoy what they cannot produce;
It creates more jobs as in transporting, selling, manufacturing because of the need to increase production to meet foreign demands;
It brings about specialization and mass production which in turn results in lower unit cost of the product;
It generates revenues for the countries involved;
It fosters international relations;
It encourages the transfer of technology;
It promotes economic development.

(ii) Disadvantages of International trade:

It kills local industries whose products cannot compete with those from developed countries;
It puts the country into perpetual dependency on foreign goods;
It leads to dumping;
It may lead to the importation of harmful goods;
It creates unemployment in importing countries;
It leads to unfavourable balance of payment.

Previous Next