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 …show more content…
Thus, free trade is in a way selfish as it is very competitive. Big profitable companies gain more profit as they benefit from the advantages of free trade by outsourcing and offshoring. Smaller domestic companies however may be affected badly when they cannot keep up. On the other hand, free trade and competition is vital to keeping the economy thriving. Without free trade the consumers would not have access to so many products as economies of scale have the power to increase prices without free trade. When the costs of essential goods rise the economy can’t benefit, as people will not have money for luxury goods. Free trade is vital to economic development.
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