The document discusses free trade and its benefits to developing countries. It argues that free trade allows nations to focus on their comparative advantages and leads to more specialization and higher overall output. Developing countries that have adopted free trade have experienced much faster growth. The document lists several advantages of free trade for developing countries, including higher employment, less child labor, access to new markets, higher investment, and increased life expectancy. In conclusion, it states that globalization presents opportunities for greater prosperity through economic freedom and innovation.

1. Subject: International Trade
Submitted By
Mohammad Tawhidur Rahman
Bangladesh
Date of Submission:
22 December, 2015

2. Mohammad Tawhidur Rahman P-2
Question # 2 : Classical trade policies demonstrate that free trade will
benefit us, but infant industry theory and strategy trade
policy theory tell us we must have some protection of our
market and industries on the other side. In your opinion,
do you agree with or against free trade? Why?
Answer # 2 :
Globalization is a phenomenon that has become overtly visible around the world
within the last 20 years. Globalization means worldwide economic, political, technological
and cultural integration, a sharing of ideas, opinions and practices, greater freedom of
movement and the diminution of national borders.
The beginning of liberalization inspired countries to relax trade barriers which
enhanced global conversations regarding free trade and the environment as well as
increasing the spread of information and communication technologies. This directly
affected the development of cheap and effective production methods which have had a
dramatic effect on many companies and organizations. Consequently, it has given them
the opportunity to access many resources.
As a result of globalization, relations between companies grew in terms of sharing
production techniques, applied organizational models and the implementation of
employment policies. In this regard, different geographies and different production areas
of global companies along with their unique organization, philosophies and cultures come
together, and with synergy, create free trade relation, create a better world.
That is why I do agree with Classical trade policies, which demonstrate that free
trade will benefit us. Free trade is a win-win proposition because it enables nations to focus
on their core competitive advantages. The unrestricted purchase and sale of goods and
services between countries without the imposition of constraints such as tariffs, duties
and quotas, thereby maximizing economic output and fostering income growth for their
citizens.
Formerly insular economies such as China and India have expanded at much
faster growth rates since they adopted free trade principles in the 1980s and 1990s,
respectively. Free trade enables nations to concentrate their efforts on manufacturing
products or providing services where they have a distinct comparative advantage,
according to the theory first espoused by economist David Ricardo two centuries ago. A
free trade policy should enable a nation to generate enough foreign currency to purchase
the products or services that it does not produce indigenously. The process works best
when there are few if any barriers to entry for such imports. The imposition of artificial
constraints such as tariffs on imports or the provision of subsidies to exports will
introduce distortions and impede free trade.
Free trade encompasses many practices and theories. The most common
application of free trade is the reduction or removal of commercial barriers between
countries. This allows a freer flow of labor and goods between member countries in a trade
pact. As free trade agreements become more common around the globe, the positive impact

3. Mohammad Tawhidur Rahman P-3
on developing countries has been touted as one of their greatest successes. There are
several advantages to developing countries that participate in free trade:
 Higher Employment Rates: As developed countries are able to move their
operations into developing countries, new job opportunities open up for local
workers. Increased levels of employment lead to a higher standard of living and
more consumers purchasing. This ultimately sparks the country's economy and may
help to develop locally owned business.
 Less Child Labor: Child labor occurs in developing countries for many reasons but
one of the main reasons is lack of technology. Children are used as a cheap
substitute for manufacturing equipment. Free trade allows companies to invest in
equipment and pay higher wages to adult workers through foreign investment. With
higher family incomes, children are able to attend school rather than work.
 Access to New Markets: Not only does free trade allow foreign-owned companies
to establish themselves in developing countries, it also allows native companies to
sell to foreign markets. This expands their customer base and leads to new products
and services and the viability of investing in innovation. This is particularly true for
small businesses in developing countries. These companies no longer have to worry
about absorbing the costs of tariffs and other barriers to market entry and can sell
their products freely.
 Higher Levels of Investment Capital: Most free trade agreements also reduce
restrictions on foreign investment. With new capital entering a developing country,
it begins an upward productivity cycle that stimulates the entire economy. An
inflow of foreign capital can also stimulate the banking system, leading to more
investment and consumer lending.
 Increased Life Expectancy: An increase in employment levels, incomes, and the
general standard of living alleviates hunger and lack of medical care in developing
countries. Preventative medical care including checkups and vaccinations are
available to more of the population. It also increases the number of children who
are educated and attend school regularly. The ultimate result is an increase in the
average life span and a reduction in infant deaths.
The Industrial Revolution brought freedom of movement and increased opportunity
to all economic levels of society. It also set the stage for social and democratic progress
of a magnitude that would have been impossible earlier. And although history suggests
that this new era of market globalization may well be accompanied by new problems
for which the solutions once again will lie in the power of human ingenuity and
innovation, it also presents an unprecedented level of opportunity for people to achieve
economic freedom and greater prosperity.
-THANK YOU-