Term Paper on The Benefits And Advantages of Free Trade
Free trade is described as a trade policy by which businesses can free flow their goods and services between nations without any intervention or interference from the governments. A term paper on the benefits and advantages of free trade would require students to explain how adopting a free trade system would set their economy at an advantage from the rest of the countries, or simultaneously with other nations.
You should begin your term paper by explaining how the notion of free trade was first introduced through David Ricardo’s Theory of Comparative Advantage. You need to enlighten how trading partners gain mutual benefit when they engage in free trade after producing the product in which they have a lower opportunity cost. In other words, they produce the product in which they have a comparative advantage.
Another important aspect of your term paper on the benefits and advantages of free trade would include the basic construction of a free trade market. You will explain how free trade markets are free from artificial prices and false supply and demand. To make the reader understand the free trade model, you should provide features of an interventionist trade economy, which is governed by protectionist measures such as, taxes, subsidies, tariffs, trade barriers and many others.
It is contended that free trade leads to a superior market and trade economy. Here are a few benefits and advantages of free that you can add in your term paper on the benefits and advantages of free trade.
1. You should explain how countries advantage their position through comparative advantage and low opportunity costs. Then you need to highlight that when countries produce goods that they have the lowest opportunity cost in, they can gain on the economies of scale and produce goods at a much lower prices than other countries.
2. Explain how free flow of goods and services between countries would affect demand. As such competition from lower priced products will challenge domestic companies to reduce costs through improving efficiency. Explain how competitive market will thwart monopolies.
3. Free trade creates an environment of classic demand and supply. Therefore the growth in economic wellbeing of a nation due to free trade will truly reflect the growth of a country. This growth is translated in terms of improved and secure jobs, better purchasing power and improved standard of living etc.
Other benefits and advantages of free trade include effective use of raw materials, increased choice of products, and peace and tranquility among world nations. You should research and provide examples to include in your term paper on the benefits and advantages of free trade. Also give an analysis of your country’s position if they adopt a free trade regime.