free trade

Topics: Economics, Poverty, World Bank Pages: 1 (284 words) Published: August 24, 2014
Free trade is the path to prosperity for countries, benefiting consumers, producers and governs. It enhances competition and eliminates inefficient firms by requiring better productivity, which enables products to reach consumers at a lower price and variety, and create new jobs, thereby increasing economic development (Bernanke 2007, para. 4; World Bank 2010, para. 1). Although free trade has the potential to stimulate a country development and economy growth which benefit all consumers, rich nations have garnered the majority of the benefits. For instance, Western countries have not permitted the wealth flow keeping their barriers, while developing countries have been persuaded to remove their ones (Stiglitz cited in Buchanan 2002). Additionally, Food and Agricultural Organization (cited in Mousseau and Mittal 2005, para. 4) states that the low average tariff for agricultural products, which is the income for 2,5 million people in the developing nations (para. 2), has contributed to the decline the economy of these nations.

Free trade policy enables the flow of goods and services between countries. Developed and developing nations should be benefited by free trade such as importing and exporting products to others freely without the payment of taxes or quotas. In addition, free trade incentives a nation’s development, and also economics rising (World Bank 2010). Free trade could be favourable for everyone whether, like in theory, it happened in practice. According to Stiglitz (cited in Buchanam 2002) richer nations are disproportionally benefited more than poorer countries. For example, he states that Western countries have convinced poor countries to cancel their barriers, while they have not done the same. Moreover, Scott (2003, para. 1) argues that free trade has helped to increase inequality in U.S. Even though free trade should create economically equality between richer and poor nations, it does not happen truly.
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