Free Trade

Evaluation

Free Trade has more advantages than advantages and the advantages also weigh out the disadvantages in the long run as oppose to the short run. In the short run although free trade may lead to the collapse of manufacturing/agriculture/textiles industries in developed countries and result in structural unemployment, it allows for more productive and allocative efficiency in the long run-beginning to solve a fundamental economic problem. There are disadvantages and advantages for both developed and developing countries, however in the long run the increasing integration of developing countries into the world economy may stimulate economic growth and allow an improved standard of living. Developing countries will also be given a chance to diversify their economy and become less reliant on unreliable and unstable industries such as agriculture as their main source of income. Moreover there will be a significant time lag until advantages of free trade begin to show, as the patterns of demand and supply and the structure of each individual country's economy will take time to respond. In addition, the full effect of the advantages free trade provides may never be visible as particularly in developed countries, when low-skilled workers begin to lose their jobs and powerful trade unions lobby the Government to impose protectionist measures such as tarrifs, the Government may act in their own Political interest in order to keep the people happy leading to wastage of scarce resources. Finally, as when any economic activity is occurring, there will always be winners and losers. In the case of free trade however, even the losers such as low-skilled workers in developed countries will benefit in the long run as a result of greater training and education.