Introduction One of the major principles of globalisation is free trade, which emphasise on elimination of barriers that limit trade between different countries in the global community (World Bank 2002). Proponents of free trade argue that it is one of the most “effective trade practices of ensuring sustainable economic development in developing economies” (Abiad, and Ashoka 2002, p49)…
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Therefore, the notion that increasing the volume of commerce by promoting free trade would spur economic development is not applicable to all countries, especially in the developing world. This paper examines the various reasons why free trade is appropriate for promoting economic development in particular developing countries. Free trade provides more opportunities of accessing international resources in both developing and developed economies. However, unregulated access to international markets, especially of developing economies is disastrous to development and sustainability of local industry in these nations (Wilber and Jameson 1992). Therefore, for countries to reap maximum benefits of globalisation, they must device appropriate trading practices that encourage expansion of trade, while protecting the local industries at the same time. Free trade presents several benefits to developing countries. Some of the benefits include availability of cheaper and high quality commodities in the market due to increased competition. Globalisation promotes specialisation where countries specialize in large-scale production of goods and services (Barro, 1997). According to Barro (1997, p19), specialisation lowers the cost of production because the countries concentrate on production of goods and services that they can produce cheaply and more efficiently for the mass market. In addition, free trade promotes competition in the international market, which eventually benefits the consumers. According to Walter and Snyder, (2007), competition at international level compels companies to reduce the costs of their products and improve the quality in order to enhance competitiveness of their products in the market. The competition encourages innovation and adoption of more efficient technology in addition to encouraging more efficient use and management of the available resources. Therefore, free trade discourages entrenchment of monopoly in the global market. Trade monopoly causes several adverse effects in the market, including high prices, low production and reduced quality of goods and services produced (Colman and Nixson 1986). Market expansion is another important benefit of free trade to developing countries. Industrial growth and development is usually undermined by a constricted market. According to Bates (1981), limited market especially in least developed economies undermines division of labour, which ultimately leads to low production. Free trade encourages adoption of modern technology especially in developing economies that mostly rely on traditional methods of production, limiting mass production of goods and services (Bienen and Jeffrey 1996). In spite of the existence of free trade for a considerable time, developing economies still lag behind in utilization and adoption of modern technology in production. This undermines economic development and flow of capital in developing economies (Collier, 2008). In spite of the apparent advantages of globalisation to developing economies, free trade has negatively affected the economic growth of these countries in various ways. First, free trade promotes large scale and unsustainable utilisation of the available natural resources in the country (Blanchard 2008). Some of the natural resource includes mineral deposits, such as gold, diamonds, oil, copper and platinum among other valuable
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(Free Trade and Developing Countries Essay Example | Topics and Well Written Essays - 2000 Words)
“Free Trade and Developing Countries Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/macro-microeconomics/1445337-the-advantages-of-trade-to-developing-countries.
The European Commission (EC) is a regional political and economic bloc integrating about 27 countries in Europe. Its creation was after World War II with the original aim to foster economic cooperation, promote independence among trading partners and minimize instances of political and social conflict through the harmony established by engaging in trade activities.
ade preferential schemes imposed by the EU for many years in a variety of circumstances. For instance, in the year 2003, it was argued by the researchers Brenton and Manchin2 that EU preferential treatments for developing nations in the field of trade by EU have not succeeded in providing better entrance to the market of EU due to extremely stringent rules of source.
These issues were discussed in consideration to the specific aspects of liberalization and development such as removing tariff and nontariff trade, agriculture, manufacturing, and services. While this paper examines in bold strokes the liberalization thrust in North African countries, it also took time to highlight some pressing issues such as free trades effect on the capacity of North African countries for economic growth and providing its citizen higher level of social services such as Health, Education among others.
In fact, it was likewise argued that globalization and the liberalization of trade has been likewise creating not only opportunities but other consequences as well in the less developed countries. Apparently, because of the popularity of trade, much has to be done with the developing countries (Ferrer 2008).
A more interesting aspect of these debates, however, is the arguments that concern ‘developing’ countries in particular (as opposed to their developed counterparts). The paper explains both sides of the argument, with the balance tilting in favor of free trade as has been witnessed by economists over the years.
Comparative advantage is the ability of any country to produce anything at a lower comparative cost than other countries.
Free trade is important for development especially for developing countries and least developed countries. Free trade means no country needs to pay and tariffs for trading with any other country.
As a broad concept, globalization refers to the emergence of a global society where economic, political, environmental, and cultural events in one part of the world quickly come to have significance for most people around the world.
Globalization has resulted to most advances in communication, transportation, and information technologies.
This free trade can help the countries to develop as a nation as the goods can be exchanged freely. Trade is an important part of the world today and free trade has become a necessity for the developing nations. The reason for such a necessity arises because of the elevated
With low import-export restrictions, international trade has increasingly become a revolutionary practice. Today, promoting free trade is a global affair. However, the prospects of free trade are not without a costly side.