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Is free trade good for economic growth?
In our economy the question always arises in the mind of government, investors, producers that is free trade good for economic growth?
So let start with the report of developed nations the open economics grew 2-3 present per year, whole the closed economics grew at 0.7 percent per year. Among developing nation, the open economics grew at 4.5 percent per year with the closed economics again grew at 0.7 percent per year. Throughout history, when nation open themselves up to the world economy, the typical result is a subsequent increase in economic growth.
Some countries trade less simply because they are geographically disadvantage for example Zealand is disadvantaged compared to Belgium because it is further from other populous countries with their own seaports because these geographical characteristics are correlated with trade, but not related with other determinants of economic prosperity, they can be used to identify the casual impact of trade or income.
thus a rise of one percent point in the of trade to GDP increase income performs by at least half percentage point.
Trade appears to raise income by increasing the accumulation of human and physical capital and by increasing output for given level of capital. Thus openness to international trade is good for economic growth.
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16 Comments. Leave new
I agree with you completely. Free trade increases the credibility of the nation among other world economies. India was at a disadvantage till 1980s when it imposed many trade restrictions on imports and exports. Ever since the reform period took place in the eighth year plan, India has been performing quite wel, although its performance is competitively lower than the other developing countries. Thanks for sharing the article, very informative.
nice article
very informative
Agree! Good one
Good one !
Good effort !
Well explained.
Nice article..!
Free trade is reason why countries started interacting positively with each other during industrial revolution, rather than just fight wars.
Well explained article
nice work
Well written!
yes a very good article free trade practices are very good for the economy. It opens gateway for better and efficient international trade practices.
A closed economy is obviously at disadvantage but complete removal of restriction on trade might lead to disadvantage for our domestic firms. Initial stages of development require certain protections for the firms. (Infant Industry Argument) If they are implemented in a good manner they will become competitive.
Short and to the point nice article!!
very well written.