-Demand and Supply: Adequate demand for goods and a good source of supply are prerequisites for any transactions. Development countries usually demand raw materials from the developing counterparts. Developing countries on the other hand import finished products from the developed world. These forces of demand and supply thus, dictate the kind of trade that exists between various countries of the world.
-Transport and communication network: The supply of items is facilitated by an adequate means of transport and communication. Efficient transport and communication system reduces the cost of transporting the finished products to the market and leads to a decrease in the final cost of the item when finally sold to the consumer.
-Taxation: Trade between countries is restricted by the imposition of various taxes like tariffs and custom duties. To protect the local industries, a country producing similar goods like those being imported may charge higher duties to discourage importation.
-Political relations: Trading among countries require that they be in good terms. Political misunderstandings among countries discourage trade, hence denying their citizens the goods in demand.
-Capital: An important item in trade is money which is used in the exchange of goods and services. Traders require capital to start businesses either from their own savings or in the form of loans. In Kenya, for example, many businessmen get loans from Industrial and Commercial Development Corporation (ICDC) and Kenya Industrial Estates (KIE) to set up their businesses. Other financial institutions include Agricultural Finance Corporation (AFC).
maurice.mutuku answered the question on August 15, 2019 at 13:56
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