Do you know that How Free Trade Contributes To Developing Countries & Economies? Free trade takes into account several theories and practical applications, being tied to economic betterment allowing countries to carry import and export without any government intervention. This government involvement includes tariffs, bans, limitations so on. Free trade has several different advantages to countries that are in their development phase.
The term ‘developing countries’ can be expanded and widely used for a nation or country, currently with low economic resource and lifestyle that isn’t too chic. This free or global trade agreement is the key to boost a country’s economy and improve the overall standard of living.
One of the most common applications of free trade is complete removal or at least significant reduction in commercial barriers between nations thus allowing a freer flow of goods, manpower for mutual progress. And as free trade agreements become more common across the world, the already optimistic impact is perhaps the greatest visible success.
Bigger & Better Economic Resources
Of the many benefits, one of the best for developing countries following free trade agreements is doubling the amount or access to the economic resources that include but not limited to land, and capital. Here, land represents natural resources that are readily available in a country’s border. Smaller developing countries are usually scarce with natural resource within their economic marketplace which is why free trade helps them in balancing the deficiency with the right consumer goods and services.
Such nations, if blessed with friendly neighbouring countries may be able to import more often which ensures a smoother and constant flow of goods and valuable resources available readily whenever needed for consumption. For the process to work and benefit commoners however required active, steadfast, a well-regulated and functional government which is yet another challenge faced by developing nations.
Improved Foreign Relations
An unintentional yet profitable and beneficial outcome of global trade is improved foreign relations. Developing nations usually face threats and unwillingly get caught up in a war-like situation from more powerful countries and cold rulers, however; strategic free trade can strengthen positive relations as well as offer additional protections from the same opposing nations.
Free trade agreements can also empower developing country’s military, internal infrastructure as well as improve overall political stance. Maybe unintentional, these benefits directly impacts on a country’s economy, the lifestyle of people and also boost employment opportunities.
Enhanced Production Efficiency
Efficient and more effective production of goods and development of essential skills is another great benefit of international trade for the developing countries. Although the nation might have the capability and ability to produce the best goods and give the best services, they lack knowledge or come short with the resources which make the entire thing ineffective.
Higher & Better Employment Rates
Since developed countries are able to push their operations intonations that are below them, it further presents new and better employment opportunities for the local workers. Some of the biggest and most profitable industries like automobile manufacturing, clothing assembly, and government/service jobs; most are now moved into developing countries which helps in removing the trade barriers. It’s obvious that increased employment results in improved lifestyle and better consumer purchasing, ultimately leading to strengthening locally owned businesses.
Reduction in Child Labour
There’re many different reasons for the existence of child labour in developing countries and one of the primaries is lack of essential technology. This results in children being used and abused as a cheaper alternative for manufacturing equipment.
Free trade let the participant companies invest in equipment which actually minimises employing child workers. In fact, many different international firms can pay higher wages to workers with a large family thus allowing children to attend school rather than work as slaves.
International firms also have centralized guidelines and hold the reputation of the corporation dear which provokes them in reducing child labour. Access to newer and profitable markets, high level of investment capital and increased life expectancy are other benefits associated with international trade.