The Pros And Cons Of Trade Liberalisation

Pros and cons of Trade Liberalisation

Trade liberalisation involves the removal of barriers to trade between different countries and encouraging the free exchange of goods between nations. This includes the removal or reduction of tariff obstacles, such as duties and surcharges, and non-tariff obstacles, such as licensing rules, quotas and other requirements. Most of the economic literature considers that trade liberalisation leads to an increase in welfare derived from an improved allocation of domestic resources.

Many researchers including eminent professor of economic, Paul Krugman supported the view that trade liberalisation is good to producers and consumers in developing countries such as Malaysia . It is said that many developing countries

It acts as a spur to the firms to increase the efficiency and shift their resources into other industries to remain competitive in the market. For example, trade liberalisation has been a factor in encouraging the United Kingdom to concentrate less on manufacturing and more on the service sector . Hence, trade liberalisation can boost the economic activity by encouraging competition, investment and productivity among the entrepreneurs from different regions. As a result of that, the Gross Domestic Product (GDP) of the member States could be increased and ultimately the welfare of the citizens can be

Trade liberalisation could lead to a greater exploitation of the environment due to the increase in demand from global market. Developed countries especially in the Europe rely highly on the natural resources to fuel its economic development . As a result of that, natural resources will be largely exploited for greater production of raw materials from countries with lower environmental laws. The exploitation of the environment also leads to another issue. It is reported that generally, the higher the economic development and the rate of urbanization in a country, the greater the production of solid and hazardous waste which are detrimental to the environment and the natural ecosystems . These wastes are often exported from developed countries known as countries of the Global North to developing countries, known as countries of the Global South. As a result of that, the environment and the health of the people in developing countries could be severely affected by the high concentrations of persistent organic