Positive Impacts of Free Trade on Economic Development Essay

Positive Impacts of Free Trade on Economic Development - Essay Example Free trade is particularly vital in aligning a country’s economy with the global partners. It is worth noting that countries which had initially centralized their economy lost many years of enormous benefits due to their politically driven isolation from the market economies. Today, they have aspired to tap into the benefits of joining the trading global system. However, active involvements in international trade present potential or associated risks. This is caused by active participation in global markets that are characterized by stiff competition. For instance, a country risks shutting down upcoming industries - those that are less competitive or adaptable - owing to the stiff competition presented by free trade. This is the greatest risk of free trade and has to be looked into carefully before opening up borders for free commerce (Sen., 2004). In addition to this, free trade encourages overdependence on foreign suppliers. This is unacceptable especially when dealing with sensitive supplies or those that play a crucial role in the country’s economy. A good example is supply of food commodities where many nations prefer stabilizing their food security supply so as to avoid crisis in the event of uncertainties such as war or shortage in the supplying nation. Although many countries have opted to have free trade, economists from developing countries argue that newly developed industries ought to be protected until a stage that they are less vulnerable to global competition. Therefore, some governments do so by opting to reduce the amount of imports or prohibit imports at all through trade barriers such as quotas. Additionally, imposing tariffs on imports makes it expensive hence imported...This paper offers a thorough review of numerous contributions of free trade to the economic development of countries. As it is shown in the essay, free trade contributes positively to economic growth and should be encouraged by all nations. In the last few decades trade has undergone transformation from the ancient traditional trading with goods for goods to modern exchange of goods and services for cash. Free trade can be defined as the cross boundary exchange of goods and services without government restrictions, taxes and tariffs. Every nation can find its own place in international labor division. Therefore, every country need to identify their path of supply based on her viable advantages, intensify it and make it the heart of their economic survival and progress. It is important to note that the cost and benefits of global trade is dependent on the magnitude of a nation’s domestic consumption. It is also dependent on the amount of natural resources at its disposal and the ease to tap such resources. The advantages free trade brings are, as follows. First, free trade encourages the theory of comparative advantage through specialization in goods that can be produced more efficiently. Secondly, reducing tariff barriers encourages development of trade. Thirdly, free trade encourages increased exports which are beneficial for domestic producers. Fourthly, free trade gives countries an opportunity to benefit from economies of scale. Finally, international trade enhances increased completion among nations.