International Trade

Syllabus tag: KCSE | Business Studies | Form 4 | Topic 28 International Trade

Lesson objectives

By the end of this topic, you should be able to:

• Explain the basis of international trade and its advantages and disadvantages.
• Explain terms of trade and what makes them favourable or unfavourable.
• Distinguish the balance of trade from the balance of payments.
• Describe trade restrictions and the international financial institutions.

Summary

International trade exists because resources are unevenly distributed and countries can produce different goods at different costs. Terms of trade compare export prices with import prices, and a country exporting primary products and importing manufactures tends to face worsening terms. The balance of trade covers visible goods only; the balance of payments covers everything.