Question

Summarize in point form the hands-on and hands-off argument on freer global trade. Which argument are you in favour?

Answer 1

Global trade is exchanging the goods and services across the international boundaries. There are different views for and against the international trade such as

In favour of international trade:

• Greater variety of goods available for consumption.
• Promoting efficiency in production
• efficient allocation of resoources
• Promotes employment
• Reduction in cost of production and consumption

Against International trade:

• Adverse effect on the domestic industry
• Increases dependancy on other countries
• there is always a risk of exchange rate fluctuations
• It also involves political risk, rivaliries due to trade can lead to war
• Natural resources of the country can get exploited

International trade has its own advantages and disadvantages. On the one hand it promotes the economic growth of the country on the other hand it can also demotivate the domestic producers due to increased competition. Global trade is benefitial for a country but a country shold keep in mind that there must also be a proper environment available to the domestic producers to grow. So, with the help of proper polices a country can take the advantage of global trade, ruling out its disadvantages.