A hot debate that has been circling in economies in the last few decades has been around the notion and implications of free trade policy. Whether or not there should be a free trade between nations is a topic of much discussion, and has been prevalent in the major economic discussion amongst prominent economists all around the world. The much-debated question if about the implications of free trade amongst nations, creating a worldwide globalized market, whether or not it should exist. In a holistic view, it is for sure a win-win situation for countries, as it allows the nation to focus on its core competency and maximizing economic output. Economies can foster on their homegrown potential in which they have a stronghold while having a least worry about the demands of those things which are not manufactured in the country. This allows an economy to further develop and create a market for the world to look for.
Economies such as India and China who once were singular, and had a restricted outlook towards free trade, have cashed on this new trend and developed to an extent which was previously unimaginable in these two nations. In the policies in the year 1980 and 1990, China and India respectively exported some of the products which were not available anywhere else in the world, or even if they were, prices compared to these nation’s products were quite high, thus they created a strong monopoly in whatever they were competent.
David Ricardo, a prominent economist in his theory about the free trade policy quoted on the issue “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.”
Though there are numerous advantages of free trade between economies of the world, there are also some disadvantages here is an assorted list of few of these disadvantages
- Loss of cultural stronghold: when an economy trades with different nations of the world, inflow, and outflow of people accompanies the process, thus exposing the home ground to turfs which are unprecedented and unwanted. This, though not a very signifies factor, poses a threat to the imperial fabric of a country.
- Health Issues: with goods, and services come the health issues. This is witnessed in the classic case of HIV virus, which even after originating in rural drops of Africa spread throughout the world life a wildfire throughout the world in a shot span of a decade or so.
- Uneven distribution of wealth: free trade, by creating the monopoly of one economy, creates a divide in the world economy as the wealth resides in the hands of few developed economies and the saying that the rich are getting richer and the poor becoming poorer stands true in this case.
- Loss of home market: Increase in the supply of good quality good at lower prices which are not so abundantly produced at large scale in the home country, will lose all of its markets to foreign products imported as the goods are at lower prices and supposedly of better quality. Thus killing the home market.
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