The Pros and Cons of Free Trade Essay - 1116 Words

Free Trade is the ability to trade goods and services without barriers, and for prices to rise naturally through supply and demand. In theory, Free Trade was a way to break down the barriers between countries, banishing taxes and allowing prices to be naturally set through supply and demand. According to the World Trade Organization, this gives the poor countries the opportunity to specialize in the production of goods that derive from their environment and natural resources with the capacity to sell those same goods to the western world, while being able to buy back goods that may not produced in their native country. This idea is to be beneficial to all; however, the rich become richer while the poor remain poor. Free Trade Agreements†¦show more content†¦Those economically disadvantaged (poor) within a country generally gain from a loose trade. A loose trade is generally a strong positive contributor to poverty reduction. This allows people to exploit their productive pot ential, assists economic growth, restrains illogical policy interventions and helps to insulate against shocks. This corresponds with a new World Bank study which, used data from 80 countries over four decades, confirmed that openness boosts economic growth and that the incomes of the poor rose one-for-one with overall growth. Economic analysts say trading among other countries with no stipulations improve global efficiency in resource allocation (Tupy, 2005). Free Trade delivers goods and services to those who value them most and allows partners to gain from specializing in the producing those goods and services they do best; according to Tupy’s findings, Economists call that the law of comparative advantage. Tupy also states when producers create goods they are comparatively skilled at i.e. Germans producing beer and the French producing wine, those goods increase in abundance and quality. Trade allows consumers to benefit from more efficient production methods, for example , without large markets for goods and services, large production runs would not be economical. Large production runs, in turn, are instrumental to reducing product costs while lower productionShow MoreRelatedPros And Cons Of Free Trade Essay3046 Words   |  13 PagesPros and Cons of Free Trade I. Introduction Free trade, the ever present driving force behind our national and world economy, is a trade policy embroiled in controversy. It is considered by most economists to be an almost perfect trade policy, barring a few negative effects. Free trade has been shown to increase production, output and income levels in an economy. However, there are many people that view free trade as destroyer of economies and a catalyst of poverty. 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