Saturday, June 8, 2019

Free Trade and Developing Countries Essay Example | Topics and Well Written Essays - 2000 words

Free Trade and Developing Countries - Essay ExampleTherefore, the conceit that increasing the volume of commerce by promoting free trade would spur economic development is not applicable to all countries, especially in the maturation world. This paper examines the various reasons why free trade is appropriate for promoting economic development in particular developing countries. Free trade provides more opportunities of accessing world-wide resources in both developing and developed economies. However, unregulated access to international markets, especially of developing economies is disastrous to development and sustainability of local industry in these nations (Wilber and Jameson 1992). Therefore, for countries to delineate maximum benefits of globalization, they must device appropriate trading practices that encourage expansion of trade, while protecting the local industries at the same time. Free trade presents several(prenominal) benefits to developing countries. Some of th e benefits include availability of cheaper and high quality commodities in the market due to increased competition. Globalisation promotes specialisation where countries specialize in large production of goods and services (Barro, 1997). According to Barro (1997, p19), specialisation lowers the cost of production because the countries concentrate on production of goods and services that they can produce cheaply and more expeditiously for the mass market. In sum, free trade promotes competition in the international market, which eventually benefits the consumers. According to Walter and Snyder, (2007), competition at international level compels companies to reduce the cost of their products and improve the quality in order to enhance competitiveness of their products in the market. The competition encourages innovation and adoption of more efficient technology in addition to encouraging more efficient use and management of the forthcoming resources. Therefore, free trade discourag es entrenchment of monopoly in the global market. Trade monopoly causes several adverse set up in the market, including high prices, low production and reduced quality of goods and services produced (Colman and Nixson 1986). Market expansion is another important benefit of free trade to developing countries. Industrial growth and development is usually undermined by a constricted market. According to Bates (1981), limited market especially in least developed economies undermines element of labour, which ultimately leads to low production. Free trade encourages adoption of modern technology especially in developing economies that mostly rely on traditional methods of production, contain mass production of goods and services (Bienen and Jeffrey 1996). In spite of the existence of free trade for a considerable time, developing economies still lag behind in utilization and adoption of modern technology in production. This undermines economic development and flow of capital in develop ing economies (Collier, 2008). In spite of the apparent advantages of globalisation to developing economies, free trade has negatively affected the economic growth of these countries in various ways. First, free trade promotes large scale and unsustainable utilisation of the available natural resources in the country (Blanchard 2008). Some of the natural resource includes mineral deposits, such as gold, diamonds, oil, copper and platinum among other valuable

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