How Realistic Is Free Trade in the Real World?
I - Introduction:
Nowadays, virtually almost every country in the world has once engaged in trade activities due to the obvious benefit it can bring. Besides, free trade activities are also being encouraged in all over the world. However, along with these benefits, free trade in fact brings plenty problems, especially for the developing countries. This paper will discuss the advantages and disadvantages of free trade in developing countries, and provide a pessimistic point of view in the global growth and development in the future.
II – Overview of Trade and Free Trade
Going by the standard definition of the term “Trade”, it is nothing but a simple activity that involves two or more countries engaging in the exchange of goods and services. Such exchanges of goods or services can be between two parties or several parties. Based on trade, people in many countries could have a great number of opportunities to select a wide range of products and services originated from every country around the world. Additionally, it improves not only the terms of trade but also the economic health of each country. Most academic economists agree and accept the obvious theory that trade benefits both parties involved in the transaction. Trade is a concept that exists largely due to the differences in the cost of production of some tradable commodity in the various locations (Zaidi, Kadiwala). Nevertheless, a few countries do not believe in the benefits of trade, they keep pursuing conservative policy and isolate itself from global integration such as North Korea.
Along with Trade, there is another term which needs to be clarified: “Free Trade”. According to Athony Carter, Free trade refers to the right to sell goods and services around the world without any hindrance. With free trade the only thing determining the price of items will be supply and demand factors. As well as goods and services, free trade can also refer to the ability of labor to move freely around the world.
Nowadays, virtually almost every country in the world has once engaged in trade activities due to the obvious benefit it can bring. Besides, free trade activities are also being encouraged in all over the world. However, along with these benefits, free trade in fact brings plenty problems, especially for the developing countries. This paper will discuss the advantages and disadvantages of free trade in developing countries, and provide a pessimistic point of view in the global growth and development in the future.
II – Overview of Trade and Free Trade
Going by the standard definition of the term “Trade”, it is nothing but a simple activity that involves two or more countries engaging in the exchange of goods and services. Such exchanges of goods or services can be between two parties or several parties. Based on trade, people in many countries could have a great number of opportunities to select a wide range of products and services originated from every country around the world. Additionally, it improves not only the terms of trade but also the economic health of each country. Most academic economists agree and accept the obvious theory that trade benefits both parties involved in the transaction. Trade is a concept that exists largely due to the differences in the cost of production of some tradable commodity in the various locations (Zaidi, Kadiwala). Nevertheless, a few countries do not believe in the benefits of trade, they keep pursuing conservative policy and isolate itself from global integration such as North Korea.
Along with Trade, there is another term which needs to be clarified: “Free Trade”. According to Athony Carter, Free trade refers to the right to sell goods and services around the world without any hindrance. With free trade the only thing determining the price of items will be supply and demand factors. As well as goods and services, free trade can also refer to the ability of labor to move freely around the world.