1a) Advantages of free international trade 1. Increasing the production. Countries are enabled by free international trade to specialise or to focus in the production of the goods in which they have a comparative advantage. Specialisation countries can take the benefit of efficiencies generated from increased output and economies of trade. The size of the firm’s market are increased by the international trade which results in lower average costs and increasing in productivity, as it ultimately leads to increase in production.
International trade is the exchange of services, goods, and capital among various countries and regions. International trade accounts for a portion of a country’s gross domestic product. It is also a major source of revenue for developing countries. Over the years, International trade has thrived due to the multiple benefits it has offered different countries on a global scale. The rise in the international trade is essential for the growth of globalization.
In addition, globalization uplifts those in poverty and creates more technologically advanced societies. Moreover, many of the problems associated with the process of economic globalization can be solve through adjustments in how trade liberalization occurs. Ultimately, the gains of economic globalization far outweigh the costs. The integration of economies benefits all those involved as larger markets ultimately create greater growth and efficiency – an assertion that is grounded in both theory and practical experience. Economic theory states that larger markets are more efficient by nature because they allow for the realization of greater economies of scale.
Economic growth is the most effective instrument for reducing poverty and enhancing the quality of life in developing countries. The benefits brought about from economic growth is strong growth and business opportunities enhance incentives. This may lead to the rise of a strong and growing group of entrepreneurs, which should generate pressure for enhanced administration. Strong economic growth therefore advances human development, which in turn promotes economic growth. But, under different conditions, comparative rates of development can have altogether different consequences for neediness, the occupation prospects of poor people and more extensive pointers of human development.
The increase disposal income enables households to spend some of this extra income on purchasing goods and services expanding companies supply rates or spend the income on investments, thus creating the supply for job opportunities and sometimes save the remaining income. Their increased spending leads to a larger consumption in the aggregate economy facilitating the circular flow of income. Companies that produce the much-needed goods and services for the increased demand have to subsequently increase their production. An increase in production to cater for the growing demand for goods and services may result in the supply for job opportunities increasing taxes remitted to the government. All these translates in the further increase of income levels and output in the economy.
Better quality goods including more variation of goods and helping maintain closer relations between countries. There is better utilization of benefits and resources in the countries. Economic growth- in free international trade the countries involved in free trade experience rising living standards, increased real incomes and higher rates of economic growth. Larger market to sell, so more potential customers for firms Encourages exports and imports so consumers have more choice so a higher standard of living Firms produce higher quality of goods due to increased competition The negative points of Free International Trade are- Facilitated commerce system works effectively if all the countries contribute with each one in turn and take after this methodology. On the off chance that a few nations choose that a couple of countries decide to expansion more by driving import constraints, the plan of encouraged business can't work.
The best way that the country is helped is through the increase of economic growth. This is helped through the increase of the individuals who help in mastering the best ways to increase the economy of the country. There are different measurements that are taken to ensure that the students who are sent abroad for international studies are retained in their mother countries to help themselves in the making of their mother country a better place. This helps the mother country in different ways making sure that the economic profit is increased.
The United States will benefit from free trade because the market to purchase U.S. made goods and services will increase dramatically in size, thus increasing trade revenues. By doing so, the U.S. can specialize the production of such goods and services in which they maintain a comparative advantage in, while importing products from other nations at a more cost-effective price for the benefit of the consumer. As of late, the debate of free trade has plagued U.S. foreign policy and caused many to question its overall successfulness however, the benefits of free trade severely outweigh the losses. Free trade builds economies, balances power, and can ultimately decrease trade deficit. While the U.S. is still developing its foreign policy to adopt the concept of free trade, recent free trade agreements can justify the necessity for such policies.
This paper will examine the key factors of economic growth in the above countries. Second, it will explore the reason behind their faster growth compare to neighboring developing countries. Human Capital One of the main key factors of economic growth is human capital. Both BRICS countries have well skilled labor. The stock of knowledge accumulated by employees resulted in higher GDP.
Indirectly, high increase make better standard of living. Besides that, more selection of goods and services are there for consumers. Again, more investment will be available cause of good economy growth. Last but not least, a good economic in a country improving public services. For example, government spends more on education and development areas.