Question

write some of the arguments about the free trade.

Answer 1

Free trade is a policy in which the government does'nt intervene in the trading practices of a country. The government does not restrict import and exports. There are certain arguements for and against free trade which are discussed below in the following points.

Arguements for Free Trade:

• Free trade leads a country to complete specialisation of a good in which it has comparative advantage which leads to optimum and efficient use and allocation of its available resources.
• Free trade results in an increase of global output since optimum, efficient use and allocation of resources helps the producers to produce in a mass scale.
• Free trade leads the countries to obtain goods at a relatively cheaper price which results in an increase in standard of living which again leads to higher consumption as well.
• Free trade enables a country to receive commodities or goods which cannot be produced with the available resources or can be produced inefficiently at a relatively cheaper price, if it would have been produced by domestic producers.
• Free trade is free from government intervention which allows a country to access the benefit of comparative advantage.

Arguements against Free Trade:

• Free trade may be beneficial to developed countries but it is certainly not beneficial for less developed or under developed countries.
• Free trade leads to a destruction of the home based industries, since the domestic people receives finished products at a relatively lower price at which the domestic industries fail to supply finished products.
• Free trade does'nt leads to development as under free trade countries specialises in their line of comparative advantage and the inefficient line is completely neglected thus causing a dampen effect to full development.
• Free trade often leads to dependance which again leads to depression if the country on which other countries are dependant faces depression.
• Free trade often leads to entering of harmful products like drugs in to the domestic market.