Theory question 105
Foreign TradeCommerce 2 (essay)
(a) Explain five measures a country could take to solve its balance of payment problems.
(b) State five disadvantages of international trade.
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(a) Any five, explained: restrict imports (tariffs, quotas, bans); promote exports (incentives, export promotion); devaluation; exchange control; import substitution; foreign loans/IMF support; attract foreign investment; diversify exports; encourage tourism; cut government spending abroad.
(b) Any five: dumping harms local industries; over-dependence on other countries; spread of harmful goods/diseases; balance of payments problems; foreign exchange risks; may kill infant industries; political pressure/exploitation; importation of inflation; cultural erosion.
Each measure should cut imports or raise exports.