7 DISADVANTAGES (OR DRAWBACKS) OF FOREIGN TRADE

Foreign trade is trade between two or more countries. Although foreign trade has many advantages, it also has significant disadvantages which are explained below.

1. Economic dependence: Foreign trade makes a country economically dependent because it forces it to rely on other countries for its supplies.

Such reliance and interdependence usually result in economic exploitation as exemplified by the continuous exploitation of less developed countries in Africa by developed countries in Europe.

2. Overuse of natural resources: The possibility of foreign trade allows the country to exploit its natural resources and produce more goods and services.

This could have long-term on the country because the natural resources may become exhausted in a short period. 

Moreover, environmental degradation can also result from the use of natural resources for international trade.

For instance, the Nigerian government's exploitation of petroleum is the major cause of the Niger Delta's environmental degradation 

3. It may result in dumping: In a bid to gain market share in the importing country, the exporter may sell goods at a price leaser than that If Its own country.

This is known as dumping. More specifically, dumping is when an exporter sells a good at a lower price outside of their country.

The exporter may flood the market of the importing county with goods at drastically reduced prices, which may result in fierce competition for indigenous industries.

The consequence is that since the price of the imported goods and services is lower than what is available domestically, rival businesses in the importing country may go out of business.

4. Import of harmful goods: Dangerous and harmful goods can be imported through international trade.

For instance, Nigeria imports tobacco, which is used to produce cigarettes that are extremely harmful to the health of the population.

Additionally, it is possible for substandard products that are extremely hazardous to public health to be imported through international trade

5. It can result in a balance of payments issue: Foreign trade may negatively affect a nation's balance of payments, particularly if that nation imports more goods and services than it exports.

6. Potential difficulty: A country may experience problems during a trade war or conflict if it is heavily dependent on another country for the supply of a specific good, say crude oil.

Such a challenge might emerge from the consequent drop in crude oil supply, which might lead to shortages and sharply  raise crude oil prices in the importing nation 

7. Unemployment: If a country's citizens discover that imported goods are cheaper than locally produced goods, they may decide to buy the imported goods instead, which will hurt local industries because they will have to lay off workers to cope with the drop in demand for their products and services.

That will be all for now. To repeat, there are seven disadvantages to international trade: it creates economic reliance, overuses natural resources, results in dumping, may result in the import of dangerous goods or payment problems, may produce scarcity, and may induce unemployment.

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