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

Free wiliness and Developing Countries - Essay ExampleTherefore, the notion that increasing the volume of commerce by promoting free vocation would spur economical development is not applicable to all countries, especially in the exploitation world. This report card examines the various reasons why free trade is appropriate for promoting economic development in particular exploitation countries. Free trade provides more opportunities of approaching international 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 reap maximum benefits of globalisation, they must device appropriate trading practices that encourage expansion of trade, while protecting the local industries at the same time. Free trade presents several benefits to developing countries. S ome of the benefits include availability of cheaper and high lineament commodities in the market due to increased competition. Globalisation promotes specialisation where countries specialize in large-scale merchandise 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 send away produce cheaply and more efficiently for the mass market. In addition, 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 costs of their products and break 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. The refore, free trade discourages entrenchment of monopoly in the global market. Trade monopoly causes several adverse effects in the market, including high prices, low production and reduced quality of goods and services produced (Colman and Nixson 1986). Market expansion is another great 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 division of labour, which in conclusion leads to low production. Free trade encourages adoption of modern technology especially in developing economies that more often than not rely on traditional methods of production, limiting mass production of goods and services (Bienen and Jeffrey 1996). In spite of the origination of free trade for a considerable time, developing economies still lag behind in employment and adoption of modern technology in production. This undermines econo mic development and flow of capital in developing 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 pictorial resources in the country (Blanchard 2008). Some of the natural resource includes mineral deposits, such as gold, diamonds, oil, copper and atomic number 78 among other valuable