Free Trade

Free Trade

Introduction

This paper intends to discuss the various important aspects of Free Trade. Free Trade is a concept which is usually liked by the economists; however, this concept does not come without any disadvantages. Many people continue to argue about the disadvantages of Free Trade. People think only multinational firms take advantage of the benefits provided by Free Trade. Moreover, there are several myths associated with the concept of Free Trade. NAFTA is assumed to be one of the most important trade agreements in relation with Free Trade. The ambiguities like the free trade being the way to make countries cope up with their poverty and free trade only benefitting MNCs or nations along will be answered through this paper. The purpose of this paper is to make the reader aware about the significance of Free Trade and its associated advantages and disadvantages.

Discussion

Growth of Free Trade

Developing economies has been admired for its outer-oriented or export-led growth paradigm, which was later on appreciatively emulated by other developing economies. External sector was and continues to be one of the principal sources of developing economic growth and present prosperity. For instance, with trade-to-GDP ratio of 96 percent, Korea is one of the most open and trade-dependent economies in the world. It has sustained high or medium GDP growth rates over the preceding four decades. It is widely regarded as a successful example of economic transformation in a short time span. It is known for its pool of skilled labor that is comparable to many EU economies. In the 1960s, Korean economy was a successful exporter of textiles and apparel and was able to generate a trade surplus (Dunkley, 2004).

As its comparative advantage evolved, Korea moved up the technology ladder and to high-technology manufacturing sectors. Automobiles and electronics products like semiconductors, mobile phones, and flat screens are the items in which Korea is at present a globally successful exporter. Until the mid-1980s reliance of Korea on the US market was heavy, but its US market share peaked in 1986 at 40 percent of the total. Thereafter, Korean export markets began to diversity. Until the Asian crisis struck in 1997-98, exports to the Association of Southeast Asian Nations (ASEAN) economies and China continued to rise at the expense of the United States (Li, 2011).

A number of developing nations adjusted their economic development strategies in the 1980s, with most adopting trade liberalization strategies from that time. Trade entails sustainable development as its foundation including natural resources and ecology. However, environment and natural resources are extremely different from private properties. People always overlook or underestimate the environment and then blame the business market and government. Therefore, more and more environment protection issues arise as trade liberalization continues to develop. It is important to note here that the eco-awareness has caused the world to be concerned with trade-related issues as well environment and sustainable development issues (Dunkley, 2004).

Trade globalization accelerates economic development and imposes severe impacts to the environment. The depletion of natural resources and import/export of ...