World Trade – SS3 Geography Lesson Note (First Term)

World trade is the exchange of goods and services between nations. Countries trade to benefit from comparative advantage, obtain resources they lack, reach larger markets, create jobs and build diplomatic ties. Nigeria trades heavily with developed countries because of its oil and gas, its location on the Gulf of Guinea and its diverse exports.

Behavioural objectives

By the end of the lesson, students should be able to:

1. Explain trade and state the reasons for world trade.
2. Account for the high volume of trade between Nigeria and developed countries, with reference to major world shipping routes.
3. Discuss the factors limiting world trade.
4. Analyse the impacts of world trade on the development of the Nigerian economy.

What is world trade?

Trade refers to the exchange of goods and services between individuals, businesses or nations. It is a fundamental economic activity that enables entities to obtain products they do not produce efficiently by relying on the comparative advantages of trading partners.

Why do countries trade?

1. Comparative advantage: Nations engage in trade to benefit from comparative advantage. This occurs when a country can produce a good or service at a lower opportunity cost than another country. By specialising in the production of goods in which they have a comparative advantage, countries can trade and both achieve greater overall efficiency.
2. Access to resources: Countries may lack certain resources or have limited access to specific raw materials. Through trade, they can obtain these resources from other nations that have an abundance, allowing for more diversified and efficient production.
3. Larger markets: Domestic markets may have limited demand, but by participating in international trade, businesses can reach a broader customer base, leading to increased sales and profits.
4. Job creation: Increased trade can lead to job creation. As businesses expand due to access to global markets, they may hire more workers to meet the demand for their products or services.
5. Foreign exchange: International trade involves transactions in different currencies, contributing to foreign exchange markets.
6. Diplomatic relations: Trade can improve diplomatic relations between countries.

Why is there a high volume of trade between Nigeria and developed countries?

The high volume of trade between Nigeria and developed countries can be attributed to several factors, particularly major shipping routes and global economic dynamics. The factors are:

1. Natural resources and commodities: Nigeria is rich in natural resources, including oil, natural gas, minerals and agricultural products. Developed countries, which may lack these resources or have limited reserves, depend on trade with resource-rich countries like Nigeria to meet their energy needs and resource demands.
2. Oil and gas exports: Nigeria is a major exporter of oil and natural gas. The global demand for energy, particularly in developed countries with industrialised economies, drives a significant portion of trade between Nigeria and these nations. Major shipping routes are essential for transporting oil and gas cargoes from Nigeria to global markets.
3. Strategic geographical location: Nigeria’s location on the Gulf of Guinea positions it as a strategic hub for trade in West Africa. Major shipping routes pass through this region, connecting Nigeria to developed markets in Europe, North America and Asia. This location makes Nigeria more accessible and attractive for international trade.
4. Infrastructure and port facilities: The development of infrastructure and modern port facilities in Nigeria facilitates efficient cargo handling and transportation. Well-established shipping routes connect Nigerian ports to major global trade hubs, facilitating the smooth flow of goods.
5. Diverse export products: In addition to energy resources, Nigeria exports a range of products, including agricultural goods and solid minerals. This diversity makes Nigeria an attractive trade partner for developed countries seeking various commodities.

What are the factors limiting world trade?

The following factors hinder or limit world trade:

1. Trade barriers: Tariffs, quotas and other protectionist measures imposed by countries limit the flow of goods and services across borders. These barriers hinder free trade and can lead to trade disputes.
2. Non-tariff barriers: Technical standards, licensing requirements and sanitary regulations can impede trade by making it difficult for foreign businesses to access markets.
3. Political instability: Political instability and conflicts in certain regions can disrupt trade routes, deter investments and create an uncertain business environment, limiting international trade.
4. Exchange rate fluctuations: Currency exchange rate fluctuations can affect the competitiveness of exports and imports. Rapid and unpredictable currency movements make it difficult for businesses to plan and engage in international trade.
5. Inadequate infrastructure: Poor transportation, communication and logistics infrastructure can hinder the efficient movement of goods and increase transaction costs, limiting the growth of international trade.
6. Intellectual property concerns: Disputes over intellectual property rights, including patents, trademarks and copyrights, can create barriers to trade, particularly in industries where innovation and technology are important.

How does world trade affect the Nigerian economy?

1. International trade has contributed to the economic growth of Nigeria by providing access to global markets for its exports, particularly oil and gas.
2. Participation in world trade has facilitated the diversification of Nigeria’s export base, reducing dependency on a few commodities and encouraging the development of other sectors.
3. Nigeria earns significant foreign exchange through its exports, particularly oil. This revenue is important for financing imports, servicing debts and supporting the stability of the national currency.
4. World trade allows for the transfer of technology and knowledge, contributing to innovation and the development of more advanced industries in Nigeria.
5. Increased trade can lead to job creation, particularly in sectors that grow because of increased export demand or industries that become more competitive globally.
6. Participation in world trade improves Nigeria’s access to capital, foreign direct investment and technology, which are critical for economic development.
7. World trade provides Nigerian businesses with access to larger global markets, enabling them to reach a broader customer base and expand their operations.

Evaluation

1. Define trade.
2. Mention five reasons for carrying out trade.
3. Identify five factors limiting world trade.
4. Mention five impacts of world trade on the development of the Nigerian economy.

Assignment

1. Explain two reasons why Nigeria trades heavily with developed countries.
2. State and explain two factors that limit world trade.

Teaching notes

Instructional techniques

• Identification
• Explanation
• Questions and answers
• Demonstration
• Videos from source

Instructional materials

• Videos
• Loudspeaker
• Textbook
• Pictures

Classwork and closing

Classwork: As in the evaluation.

Closing: The teacher commends the students positively.