Essay about Advantages and Disadvantages of Free International Trade

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1a) Advantages of free international trade
1. Increasing the production.
Countries are enabled by free international trade to specialise or to focus in the production of the goods in which they have a comparative advantage. Specialisation countries can take the benefit of efficiencies generated from increased output and economies of trade. The size of the firm’s market are increased by the international trade which results in lower average costs and increasing in productivity, as it ultimately leads to increase in production.

2. Production efficiencies.
The efficiency of resources allocation is improved by the free international trade, as the higher productivity and increasing in total domestic output of commodities and services are
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With free international trade a lot of jobs will be created in the country, especially in industries of manufacturing and services which can absorb the unemployment that created by restructuring as firms down their workforce.

Disadvantages of free international trade.

1. Structural unemployment may occur in the short term with the removal of trade barriers. This will have impact on large numbers of workers, as well as their families and local economies. In growth industries workers often will have difficulties to find employment.
2. Business, consumers and employees are more weak to downturns in the economies of trading partners. For example, recession in the USA leads to decrease in demand for UK’s exports, leading to falling in export incomes, lower GDP and incomes, decrease in domestic demand and rising in unemployment.
3. Some of the countries with surplus commodities may dumb them on international markets at a low price. Under such conditions, some of the efficient industries can might find difficulties in competing for long period. Furthermore, countries whose economies are mostly rural will face unfavourable terms of trade. For example, ration of export prices to import prices. Which means that their export income is more smaller than their import payments the make for high value added imports, as it leads to subsequently large foreign debt levels.

1b)
Nash equilibrium is a solution theory of a non-cooperative game which involves two or more

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