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The benefits of free trade for economic development


Free trade is a fundamental driver of economic development. The importance of free trade in promoting economic growth can be cited by some of the world's most renowned economic thinkers.


In his book "Basic Economics," Thomas Sowell explains that free trade promotes specialisation and comparative advantage, which lead to increased productivity and efficiency. When countries specialise in producing goods and services in which they have a comparative advantage, they can produce more with less and trade with other countries to obtain goods and services they do not produce as efficiently. As a result, consumers benefit from lower prices, better quality, and greater variety.


Free trade leads to increased competition, which incentivizes firms to be more productive and innovative. When firms compete in a global market, they are forced to find ways to lower costs, increase efficiency, and improve their products. This process results in lower prices for consumers and higher profits for firms. Therefore, free trade is a win-win for both consumers and producers.


In his book "Free to Choose," Thomas Friedman shares that free trade promotes economic growth by allowing countries to take advantage of their comparative advantages and to specialise in producing goods and services in which they are most efficient. This leads to increased productivity and higher standards of living.


Free trade promotes peace and stability by creating interdependence among nations. When countries trade with one another, they have a stake in each other's success, which promotes cooperation and reduces the likelihood of conflict. This process promotes global stability and prosperity.


In a free trade environment, knowledge is dispersed throughout the global economy, and it is through trade that this knowledge is utilised most effectively. When countries trade with one another, they are forced to find new ways of doing things and adopt best practices. This process leads to the spread of knowledge and the discovery of new and better ways of doing things.


When individuals are free to trade with one another, they are free to choose their own paths in life and to pursue their own goals. This freedom promotes creativity and innovation and leads to economic growth.


In a free trade environment, consumers are free to choose which goods and services they wish to purchase from a global market. This creates a powerful incentive for firms to produce goods and services that meet consumers' needs and preferences.


The benefits of free trade for economic development are not just theoretical. Empirical evidence supports the view that free trade promotes economic growth and prosperity. For example, a study by the World Bank found that countries that are more open to trade tend to have higher levels of income and economic growth. Another study by the Peterson Institute for International Economics found that the removal of trade barriers would boost global GDP by over $2 trillion per year. That's not including the Imposed global subsidies on failed "renewable technologies", which are over $1.4 Trillion a year.


The benefits of free trade are not limited to developed countries. Developing countries can also benefit from free trade by exporting their goods and services to other countries and by importing goods and services they do not produce efficiently. This allows them to take advantage of their comparative advantages and participate in the global economy.


Despite the overwhelming evidence in support of free trade, many groups from the "Left" continue to oppose it. The largest opponents are the government, government agencies, and tax-payer-funded NGOs. Some argue that free trade leads to job losses and lower wages, particularly in industries that face competition from lower-cost imports. However, the evidence suggests that the benefits of free trade far outweigh the costs and that job losses in one industry are often offset by job gains in others.


Moreover, the job losses that do occur as a result of free trade are often the result of technological change and productivity improvements, not trade itself. As Thomas Sowell is quoted as stating, "the primary reason for the decline in manufacturing jobs is not because those jobs have moved to other countries, but because of increased productivity, which means that fewer workers are needed to produce the same amount of goods."


Another common argument against free trade from the political "Right" is that it can lead to a loss of national sovereignty. However, this argument is flawed because trade agreements are voluntary and are negotiated by sovereign states. Countries are free to enter into or exit from trade agreements as they see fit, and they can negotiate terms that are in their own best interests.


Free Trade promotes peace and stability by creating interdependence among nations and diffusing knowledge throughout the global economy. The empirical evidence supports this, and the benefits of free trade are not limited to developed countries. Developing countries also benefit from free trade by participating in the global economy and taking advantage of their comparative advantages. While groups on both sides of the political spectrum continue to oppose free trade, the evidence suggests that the benefits far outweigh the costs and that free trade is essential for promoting economic growth and prosperity. In my opinion, if my economic beliefs upset both sides of the political spectrum, it is evidence in itself, that I must be on the right track. Note from the Author. I am not a financial adviser, I have been a business owner, director, or partner in several businesses, and companies for over 2 decades and have a range of economic experiences that I share with others to be better educated in making the right decision for them. I am an advocate for free-trade policies and a reduction in government interventionism, due to its very harmful and obvious flaws. The opinions shared are my own and do not necessarily represent those whom I consult with, work for, or work with.I am not a financial adviser, I have been a business owner, director, or partner in several businesses, and companies for over 2 decades and have a range of economic experiences that I share with others to be better educated in making the decision right for them. I am an advocate for free-trade policies and a reduction in government interventionism, due to its very harmful and obvious flaws. The opinions shared are my own and do not necessarily represent those whom I consult to, work for and with.

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