Advantages And Disadvantages Of International Trade

Powerful Essays
1) Discuss the advantage and disadvantages of free international trade


Increased Production

The reason for exchange is to give access to a more amazing variety of products and services.

As stated by the Heritage Foundation, free trade fosters rivalry, impelling organizations to

enhance and create better products keeping the costs low and high quality. Free trade permits

organizations to concentrate on the merchandise or services that they do best. International

trade builds a companies market share. As a result of which cost is decreased and the

productivity is increased, prompting higher rates of production.

Economic Development

Free Trade involves risk taking through increased sales and market share. The point is that

when developed nations like the United States exploit free trade, their economies develop.

This development floods into more modest nations that are financially unsteady yet are

interested in exchange. The advantage for poor countries in being able to trade for capital is

that the payoff is more immediate in their private sector

Global Cooperation

Free Trade strengthens the organizations to help the standard of law. The World Trade

Organization obliges members to respect all understandings and comply with all WTO

decisions. Nations that don't authorize contracts lose business and investors move their cash

somewhere else. If a nation needs to hold the profits of fre trade, then they must comply with

the guidelines.

Asset Allocation

Free trade enhances the allocation of worldwide assets. if the countries or individuals can

do a trade for the things they require, they can concentrate on making the ones they do best.

Imports have a tendency to suppress inflation,...

... middle of paper ...

...wever under fix exchange the government needs to maintain the exchange rate and in order

to do so they have to sell their foreign assets and reserves against the local assets leading to a

reduction in the foreign reserves of the country.

Therefore the monetary policy is ineffective under fix exchange rates.


Jackson, J (1993) Basics of macro economics, Macro economics journal, 833-14

Keynesian (1899) Keynesian Theory and its implication, Journal of Macro Economics, 248-95

Ferguson, Brian S. (2013) General theory of employment, University of Guelph, Discussion

papers, 2013-06, 186-49

Vroey, M (1994) Nash equilibrium & working, Journal of Business Economics, 208-89

Jacob, B (1987) Fixed Exchange rate policies, University of Cambridge, London, 293-97

Walt, H(1993) Monetarist theory & Classical Theory, McGraw Hill, London Press, London, 98-

Get Access