To What Extent Can Free Trade Be Viewed as Beneficial to Economic Development?
To what extent can free trade be viewed as beneficial to economic development?
Trade is one of the oldest types of economic activities known to mankind. Through decades of refining and developing, the traditional method of trading goods has evolved into exchanges of products and services. In the 18th century a British economist, Adam Smith, defined the first principle of unrestricted trade or ‘free trade’. Free trade states the possibility of exchanging goods or services without government interference, tariffs or taxes.
Free trade raises competition and increases efficiency all over the world. Countries open up their borders by free trade agreements and establishing open trade routes. It expands national borders and increases the movement of goods and cultures, creating greater good variety.
One of the greatest benefits of Free trade is that it leads to specialization. Specialization is the method of producing the goods that you are good at. For example India’s warm climate has the opportunity to grow fruit where as Canada’s environment is better at specializing in the industrial markets.
Correspondingly, through free trade efficiency is generated. For example, it prevents Canada from building greenhouses and losing time and money growing fruits that are not as tasty. When productions are efficient, goods can be sold at their cheapest possible amount.
In addition, efficiency raises competitiveness. Foreign trade leads to the possibility of cheap goods as each specializing country provides the cheapest goods. In order for companies to stay beneficial they will have to be extremely competitive. This can be done for example by investing in new technology to make production even more efficient. Less developed countries will be forced to keep up and development has to speed up in order to compete. However, foreign free trade makes it possible for less Developed Countries to get those technologies they were not able to produce themselves.
Moreover, through
Trade is one of the oldest types of economic activities known to mankind. Through decades of refining and developing, the traditional method of trading goods has evolved into exchanges of products and services. In the 18th century a British economist, Adam Smith, defined the first principle of unrestricted trade or ‘free trade’. Free trade states the possibility of exchanging goods or services without government interference, tariffs or taxes.
Free trade raises competition and increases efficiency all over the world. Countries open up their borders by free trade agreements and establishing open trade routes. It expands national borders and increases the movement of goods and cultures, creating greater good variety.
One of the greatest benefits of Free trade is that it leads to specialization. Specialization is the method of producing the goods that you are good at. For example India’s warm climate has the opportunity to grow fruit where as Canada’s environment is better at specializing in the industrial markets.
Correspondingly, through free trade efficiency is generated. For example, it prevents Canada from building greenhouses and losing time and money growing fruits that are not as tasty. When productions are efficient, goods can be sold at their cheapest possible amount.
In addition, efficiency raises competitiveness. Foreign trade leads to the possibility of cheap goods as each specializing country provides the cheapest goods. In order for companies to stay beneficial they will have to be extremely competitive. This can be done for example by investing in new technology to make production even more efficient. Less developed countries will be forced to keep up and development has to speed up in order to compete. However, foreign free trade makes it possible for less Developed Countries to get those technologies they were not able to produce themselves.
Moreover, through
Bibliography: Bureau of Labor Statistics, Office of Employment Projections. 2003a. Special Purpose Files— Employment Requirements. Washington, D.C.: U.S. Department of Labor. (Helliwell) (Helliwell). “EFFECTS OF THE CANADA–UNITED STATES FREE TRADE AGREEMENT ON INTERPROVINCIAL TRADE” University of British Columbia, 1995 KAWASAKI Kenichi, RIETI 2003 The American Economic Review, Vol. 87, No. 4 (Sep., 1997), pp. 506-519 Published by: American Economic Association Works Cited Helliwell, John F. "Effects of the canada-united states free trade agreement on the interprovincial trade." University of British Columbia, 1995. Mankiw, Greg. Greg Mankiw 's Blog. Ed. Harvard Economist. 07 05 2006. 2012 <http://gregmankiw.blogspot.co.uk/2006/05/outsourcing-redux.html>. Sklar, Holly. Trilateralism. Ed. Holly Sklar. Camebridge: South End Press, 1980. Helliwell, John F. "Effects of the canada-united states free trade agreement on the interprovincial trade." University of British Columbia, 1995. Mankiw, Greg. Greg Mankiw 's Blog. Ed. Harvard Economist. 07 05 2006. 2012 <http://gregmankiw.blogspot.co.uk/2006/05/outsourcing-redux.html>. Sklar, Holly. Trilateralism. Ed. Holly Sklar. Camebridge: South End Press, 1980.