Thursday, July 24, 2014

Advantages of free trade

What are the advantages of free international trade?


v Free trade helps one country to specialize in the production of those commodities in which they have comparative advantage. This will increase the world output and reduce the cost of   production.  So free trade   maximizes output.
v International trade based on comparative advantage will reduce the   average   cost per unit.  This develops the whole economy.
v Free   trade   leads to international specialization and division of labor. Because of this maximum   utilization of resources are possible.
v Free trade helps the consumers to buy a variety of commodities from abroad at the minimum possible price. This   raises the choice of the consumers and their standard of living.
v Free   trade   gives wide extent of market for goods.   Competition      between   firms to capture market   reduces the price of commodities and raises the quality of product.
v Under free trade each country specialize in the   production of   a few commodities this prevent monopoly
                    v  I t promote friendship and co- operation among countries
v It enable to stabilize the price of goods and services.

v It create a large number of job opportunities in various areas like marketing, banking,  insurance, transportation, communication etc.

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