Free Trade And Its Effect On Economic Growth

1993 Words May 3rd, 2016 8 Pages
Free trade is trade between countries that after negotiating between each other eliminates or minimizes the existence of Tariff and Non-Tariff barriers (Helpman, 1993). There has been an increase in free trade agreements from 1 such agreement in 1975 to 216 such agreements in 2009 although 45 agreements have been concluded while the remaining are to be executed and implemented (Bate, 2016). Developing countries rushed to free trade in mid- 1980’s such as Mexico, Philippines, Bangladesh, Ghana, Korea, India and Morocco by removing barriers.

Countries around the world are measured on the basis of being developed or developing based on factors such as; per capital income, economic and social structure, social, and civil rights and political freedom (Sanford, 2002)). Some authors urge that development of a country depends on its economic growth hence if a country, is performing well economically; after consideration of other factors mentioned above, it would be more likely for it to be classified as a developed country; having a higher average per capita income then a developing country, having a lower average per capita income and low standard of living then a developed country.

Competitive Advantages for developing countries

Developing Countries have lower cost of labour and cost of doing business hence making it cost effective & competitive to export / trade its product in the international marketing create foreign reserves in the country, increase in employment and…
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