The Benefits of Free Trade
- International trade refers to the exchange of goods & services between countries
- International trade involves the exchange of goods/service through exports & imports
- International trade is 'free' when there is no government intervention (quotas, taxes etc.) to reduce or limit trade
The benefits of free trade
- Greater choice: with access to a wider variety of goods/services, the standard of living improves
- Lower prices: with international competition prices fall giving households the ability to buy more
- International cooperation: required for trade helps countries to build better relationships which leads to lower levels of hostilities
- Flow of new ideas: innovative ideas & technology can be shared between countries
- Access to resources: output can increase & costs of production can fall with increased access to raw materials
- Increased efficiency: international competition allows the most efficient firms to emerge & this improves the use of global resources
- Economic growth: exports are a key component of the gross domestic product of many countries & an increase in exports can lead to economic growth
- Economic development: Increased output leads to lower levels of unemployment which leads to higher incomes & a higher standard of living
