Trade and Nations – in Support of Free Trade for Developing Nations
In Support of Free Trade for Developing Nations
I am in support of the elimination of tariffs and quotas on products and services to and from less developed countries (free trade), not only because it improves economic growth in developing nations, but also because it results in more efficient allocation of resources for the global economy.
First, free trade leads to greater economic growth for developing nations. Studies show that developing countries that have participated in multilateral trade reform during the past 30 years have had higher income growth than countries that pursued protectionist policies. (Pavcnik, 2011) This is true mainly because developing countries benefit from increased access to export markets in the U.S. and other rich economies. Access to larger markets allows more efficient firms to increase output and realize greater productivity. It also allows the developing country to specialize in those products they can produce more efficiently than the countries with whom they trade. In the case of developing countries, they have a cheaper, less skilled labor force compared to developed countries. Accordingly, they will produce products that require such labor less expensively than more developed countries. As production increases, firms employ more people thereby improving the standard of living and increasing consumer purchasing power in the developing country. As the standard of living increases, people become better educated enabling them to produce more sophisticated products, further increasing trade. Improvements in standards of living also lead to other social reforms such as improved medical care, reduction in infant mortality and longer life expectancies. Domestic firms within developing countries also benefit from free trade because they have access to cheaper and/or previously unavailable inputs. This enables them to increase productivity and to develop new products for trade. Consumers in developing countries benefit under free trade because developing countries can import valuable consumer goods that are not readily available in the country. In these cases, the developing country may lack either the raw materials or the processes necessary to produce a certain good. Free trade also leads to greater investment and capital flows from foreign investors. An inflow of foreign capital strengthens the banking system leading to greater investment and consumer lending in developing countries. Lastly, free trade may also help developing nations build better foreign relations with powerful countries who have a vested interest in protecting them from international threats. Developing countries can leverage their trading relationships to strengthen their military, improve their infrastructure and gain political clout in the world arena.
Many opponents of free trade with developing countries argue that they would not be able to compete effectively without