World trade 's the exchange of goods and services among nations, that is, between peoples, companies, organizations and governments in different countries. The goods and services may traverse thousands of kilometres over land or across the oceans to where they are consumed. This type of trade is also called international trading. The factors influencing international trade is what we are going to discuss in this post.
Factors Influencing International Trade
1. Resources differentials: Different parts of the world are endowed with different natural resources because climate, rocks, soil and landscape conditions are different. This creates the need for the exchange of resources between different places. For instance, Nigeria exports crude oil to countries that do not have. Similarly, Nigeria imports wheat from the U.S.A. and Canada because it does not produce enough of the commodity. Different climates of the world favour the production of various crops and products. In temperated countries, such as U.S.A., U.K., Germany, etc. wheat, fish, oats and wine are produced and exported to tropical countries, such as Nigeria, Ghana, Kenya. Etc. Similarly, tropical countries like Nigeria produce and export cross such as cocoa, oil palm produce, tea, groundnut, cotton, etc.
2. Technological knowledge: Some countries are more technologically advanced than others. For example, U.S.A., U.K., Germany, Japan and Canada are technologically advanced. The manufactured goods in these countries, such are automobiles, electronics, aeroplanes, etc. are exported to less technologically advanced countries like Ghana, Nigeria, Kenya, Zaire, etc.
3. Manpower: Some countries have more abundant supply of both skilled and unskilled manpower than others. Countries with abundant labour can export such labour, that is, the labour can migrate to countries that require their services.
4. Capital: Some countries are very wealthy and can export their capital to invest in countries that are poor. For example, Japan, UK, USA, Germany give assistance to poor countries of the world, such as Nigeria, Sierra Leone, Togo, etc.
5. Different tastes: People in different parts of the world have different tastes. Hence, the goods produced in one country may be in high demand in another country.