Free Trade - Advantages and disadvantages table in A Level and IB Economics

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Created by: Mafalda
Created on: 11-05-13 15:45

Free Trade

Advantages

There may be more economic growth
Countries can specialize and sell freely what they are best at producing (comparative advantage)
Consumers don't have to buy more expensive domestically produced goods
There is more competition, promoting cheaper products, efficiency and innovation
Less likelihood of wars and conflicts arising amongst countries
Democracy is promoted

Disadvantages

Domestic firms may not be able to compete with international ones (which in turn may lead to some unemployment)
Infant industries aren't safeguarded
Cultural Imperialism
Dumping may occur
There may be exploitation of labour and resources in developing countries

Evaluation

Countries who are able to compete on a global scale and have comparative advantages benefit from free trade, whilst developing countries or countries would infant industries would benefit from certain protectionist measures.

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