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Free Trade Essay

931 words - 4 pages

Advantages and disadvantages of free trade
In international trade theory, globalization and free trade results over the long term in "commodity price equalization" across countries; or if capital, labor and technology are highly mobile, free trade and globalization is only for rich countries. “Free trade” means freedom to trade. Freedom is a concept and principle that everyone holds dearly, except dictators and bullies [1]. We are going to analyze the advantages and disadvantages of free trade in both cases: the poor and rich countries. The aim of this work is to look into the particularities of free trade. In order to achieve this aim we shall present tasks as following:
* Define the ...view middle of the document...

People are happy when they have plenty of choices of products, and sources to find various goods and services to fill their needs. In this sense most people advocate free trade whether they know it or not. [1]
Free trade in theory increased production of a country. Free trade enables countries to specialize in the production of those commodities in which they have a comparative advantage. With specialization countries are able to take advantage of efficiencies generated from economies of scale and increased output. International trade increases the size of a firm’s market, resulting in lower average costs and increased productivity, ultimately leading to increased production.
Free trade creates employment for industries and unemployment for people. Trade liberalization creates losers and winners as resources move to more productive areas of the economy. Employment will increase in exporting industries and workers will be displaced as import competing industries fold in the competitive environment. For example with free trade many jobs have been created in Australia, especially in manufacturing and service industries, which can absorb the unemployment, created through restructuring as firms close down or downsize their workforce. When tariffs were increased substantially in the period 1974-1984 for textiles and footwear - employment in the sector actually fell by 50 000, adding to overall unemployment. [2] You have to be a person with a lot of resources (rich person) to survive in a free trade.
The Economic growth is increase in development countries and decrease in the third world countries. The countries involved in free trade experience rising living standards, increased real incomes and higher rates of economic growth. This is created by more competitive industries, increased productivity, and efficiency and production levels. [2] However it’s not real because countries like...

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