Advantages of Free Trade
What are the advantages of free trade?
Advantages of Free Trade The advantages of free trade are as follows.
- Benefit of specialization: Free trade encourages the division of labour due to which a country is specialized to produce certain kinds of goods in the country. Each and every country is concentrated to produce such goods in which it is best fitted. This activity helps to increase the efficiency of the resources of the country and produce high-quality goods at a lower cost. A country can receive the highest return by selling such products in the international market.
- Benefits to international consumers: Free trade policy benefits the consumers of international market through the exchange of the best quality goods and services at the minimum prices. Under this policy, every country specializes in production and exchanges those goods which can be produced at a comparative cost advantage. As a result, international consumers would be able to consume any types of products they like. Thus, it provides a wide range of market access to all international consumers to consume the best quality products at a reasonable price.
- Promotes healthy competition: When the free trade policy is adopted, healthy competition with the foreign producers will be promoted. In this situation, domestic producers should apply new and advanced technology and promote efficient management. It also helps to reduce the per-unit cost of production exchange policy, consumption pattern, and develop the skills of resources of the country.
- Expansion of market: When the movement of goods is not restricted from one country to another, the market of a product is expanded in a wide range. The domestic goods can be supplied in the international market and the activity of trade of a country is expanded with the rest of the world.
- Gain of technology: New and improved technology is required for industrial development. Hence, the developing countries are backward in technological improvement. They should depend on the developed countries for it. Free trade policy will help to import suitable technology from foreign countries
