Trade

Running Head : TRADE LIBERALIZATION AND FREE TRADE INCREASE THE FLOW OF TRADE AND BENEFIT THE THIRD WORLD COUNTRIES

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Date Trade is very critical in any country as it ensures that although countries have different production capabilities they can acquire all types of goods . Different capabilities arise due to the fact that different countries have different natural resources , educational capabilities , varying physical capital as well as the technological knowledge . Trade liberalization entails the reduction of limitations on trade across countries . Artificial barriers as well

as other forms of distortions are reduced (Alvarado S and Morici

, 1992 , 59 Protectionism is completely eliminated and tariffs which entail the raising of import prices , quotas that see to it that there is physical limitation on goods that can be imported as well as non tariff barriers like regulation and legislation that hinder easy entry for foreign competitors are eliminated . The US is committed to ensuring that countries eradicate barriers as is seen through its efforts in General Agreement on Tariffs and Trade (GATT ) and World Trade Organization (WTO and in Free Trade Area (FTA

Trade liberalization or policies ensure that economies are open to trade and investments with the rest of the world . It is crucial for any nation if sustained economic growth is to be attained . Free trade ensures the creation of jobs , better working conditions and the over all economic growth . No country can attain economic growth , which comes along with improved standards of living if it is in exclusion with the rest part of the world . In other words , no country is self-sufficient Trade openings as well as foreign direct investment ensure economic success especially in third world countries . Trade liberalization has seen many third world countries develop competitive advantages in the production of certain products thus increasing their production and consequently increasing the profits derived from them . This has seen the number of people living in the margins of poverty decrease . It is evident that countries focus on the outward development rather than inward developments thrive more . Such countries focus more on the interrelated relationship with other countries and together all the parties involved benefit . Countries as India , Vietnam and Uganda are relevant examples of how faster growth and poverty reduction is realized when trade liberalization takes place . Lowering of tariffs comes along with quick growth compared to those who do not (www .kent .ac .uk

Trade liberalization benefits the poor more . Protection is associated with large implicit subsidies that most third world countries cannot afford . Liberalization of trade ensures that the poor people`s incomes increase with almost the same proportion as the whole increases . With trade liberalization there is the creation of jobs , which can suit the semi and the unskilled workers in a nation such a move , ensures their graduation from a lower social status to a higher one . Again , the reduced inequality gap that had been observed since the 1990s was partly due to trade liberalization and its effects on the economic growth...