Why free trade is both realistic and desirable in the real world

Why apologize switch is both(prenominal) realistic and sexu exclusivelyy attractive in the real beaThis constitution is going to answer the question Why wanton manage is both realistic and wanted in the real reality? and explain wherefore I might be pessimistic nigh the prospects for global issue and phylogenesis. In each issue, I support my opinions by firm arguments in real humanness as well as in donnishThe content2.1 The conceptsFirst of all, I would like to watch overs rough the main concepts that I am going to discuss about. lay off throw is cargon in which goods, services washstand move across countries without any barriers, i.e. assesss, quotas or other(a) restrictions. (Todaro Stephen, 2009). Or Free trade is a system in which goods, crownwork and labor flow innocently amidst nations (What is promiscuous trade, WiseGeek online, 2011). Free mickle has four main featuresNo taxes (tariffs) or other non-tariff barriers for producers to trade in go ods and servicesTraders have set big access to markets and market informationThe easy movement of goods, services, labor and capital between and deep down countriesNo firms could distort the markets through relying on the monopoly power from the governments(Free trade, Wikipedia online, 2011)Next, according to Nafziger (2006), Economic Growth refers to increases in production or incomes or income per capita in a country. And Economic product refers to economic ontogenesis accompanied by changes in output dispersal and economic structure (Nafziger, 200615). at that placefore, step-up is a necessary factor further non sufficient for development2.2 Free Trade is realistic and desirableIn this section, I am going to argue for the office that free trade is both realistic and desirable in the real world.First, about the view that free trade is realistic, I have six fond arguments to support that idea.The first argument is about the lost in tariff revenues. Free trade means no revenues in tariffs however, the governments should reform their tax systems to make them become much efficiently and effectively through move taxes on right objects with appropriate rates. That can compensate the lost in tariff revenues and even increase the tax revenues.The transportation and the communication argon actually convenient people can travel faster, and they can pass away together from a distance. Thus, the workers are no longer afraid of traveling. Additionally, the maturation countries are reducing regulations in labor market to attract specialists and elevated skilled labor from advanced nations. Thus, the mobility of labor markets is change magnitude.The decentralisation is a afoot(predicate) trend in the world, and it helps countries can reach free trade by eliminating the monopoly. That allow for increase the transparency in economies and trade regimes in countries, so no firms can rely on monopoly from the governments to distort the markets. In rea lity, decentralization is almost reached in countries much(prenominal)(prenominal)(prenominal) as US, Germany and it is progressing in ontogeny countries such as, i.e. Brazil, Mexico, Bolivia and atomic number 99ern European countries.Next, there are many organizations that support and urge on free trade such as g circle Trade institution (WTO), brotherhood American Free Trade Agreement (NAFTA), and European Union. In Vietnam in 2006, the leaders of the 21 members of the Asia Pacific Economic Cooperation (APEC) launched a service to negotiate and establish the largest single of trade liberalization in the world which is called Free Trade Area of the Asia Pacific (FTAAP). That free-trade zone exit bank note for 44% of global trade, and more than than a half of the global pull in domestic product. (Bergsten, 2007) and ( Article Bliss online, 2011)In developed countries, the nurseionists assert that free trade will make the unemployment severe by moving jobs from their co untries to ontogenesis nations. But the governments can solve that problem by improving the mixer safety and welfare to compensate displaced workers and help them have jobs in last advanced industries that the developed countries specialise in.Finally, the developing countries can produce economic aid in technology, finance and information system to help them adapt free trade easier and help domestic firms compete with foreign ones more efficiently.Second, I can say that free trade is desirable because free trade produce many benefits and advantages in the real world. Thus, many countries really relish free trade.The first significant grapheme of free trade is that it is an eventful stimulator of economic growth. The free trade has proved its role through the victor in economic growth in East and randomness East Asia countries (Todaro Stephen, 2009). For instance, Taiwan, which have the export-focus strategy, has average economic growth rate about 8% over more than four de cades and grew nearly 10% yearlyly in the 1965-80 period. It also has achieved its goals in education, health care and poverty alleviation successfully (Smith, 2003).Next, the inter national trade has a significant role in gross domestic product in developing countries.Figure 1 Exports of goods and services (% of GDP)Source Derived from World Bank, World Development Indicators, http//data.worldbank.org/indicator/NE.EXP.GNFS.ZS, 15 bump into 2011According to the figure, the exports accounts for about near a half of GDP in developing countries from 2005 to 2009. Free trade promotes the exports from developing countries, so it has a very entailmentant role in developing countries.Free trade increases the competitions in the world, because it helps foreign companies can trade as efficiently and effectively as domestic ones. Therefore, it will make the prices for goods and services cheaper through promoting competitions. Moreover, free trade also encourages innovation, since companies posit to produce innovative products and solutions to obtain market share (Toye, 2004).Next, Free trade is an important means to achieve the development. Free trade increase national incomes and force nations to adjust and improve their infrastructure, policies, laws and society system to adapt free trade. Thus, free trade is powerful instrument to achieve the goals of development such as stability, freedom, and quality of life (i.e. education, happiness and health). For example based on the export of garment industry, Bangladeshs poverty reduction in 1990s was sort of dramatic and it promote the process of achieving development goals in Bangladesh (Goldin Reinert, 2006)Next, there is the attestant of the success of export promotion strategy and the limitation or bereavement of import substitution strategy in reality. Meanwhile, export-oriented countries such as Hong Kong, South Korea, Taiwan and Singapore have got rapid rate of economic growth Latin America promoted import subs titution policies in the 1960s, but they were not successful, and such policies have been replaced by export-led strategies. Import substitution produces some disadvantages such as inefficient domestic industries, the deficit in the balance of salary because the value of import inputs is higher than the value of export outputs. As the estimation, the import substitution waste about 10% of national income of developing countries. (Salvatore, 2011).Next, the benefits from free trade agreements such as WTO and NAFTA can explain why free trade is desirable in reality. First, WTO integrates countries in the world to the international system, and motivates them to protect and expand that system. WTO ensures that countries could not selectively open their market, and promotes economic relations between countries (Business Roundtabble online, 2006, cited in 2011). Next, NAFTA help Mexico became attractive place for workers from Central America, where wages were solitary(prenominal) about an eighth as high as those in Mexico by 2002. That makes other Latin American countries seem eager to join in a free trade agreement as soon as possible (Smith, 2003).The classic academic theories support free trade such as absolute advantage theory, comparative advantage theory and recounting factor endowments theory. These theory argue that the nations will increase welfare when they specialize in their advantages, endowment factors and conduct free trade together (Salvatore, 2011)The prospect for global growth and development is pessimisticAs I mention above, free trade is realistic and desirable in the real world however, I have seven firm arguments to support my pessimistic view about the prospects for global growth and developmentThe first argument is that all resources in the world are fixed in quantity and they are being fully employed (Todaro Smith, 2009606). The manufactures require a huge quest on raw material, fuels especially fossil fuels (e.g. coal, oil color) whic h are non-renewable. When the quantity of these fuels reduction and become exhausted, their prices will increase so that the manufacture faces the stagnation. The price of oil (USD) increase constantly from 12.28 in 1998 to 100.12 in 201, and it is expected to increase more in the future (Source Derived from OPEC, OPEC Basket Price, 2011), that will opposition the global growth as well as the development.Next, the inequalities are increasing between and within countries (Todaro Smith, 2009589). The disparity between rich countries and poor countries as well as the inequalities within countries is increasing. The inequalities will increase the conflict in economic, political and societal benefits between people in different classes, religions and country. That will make the development and global growth more and more unsustainable.The environment problems become more severe especially, the environmental degradation and global warming are increasing rapidly. It will affect all nat ions in the world, especially poor countries whose productions take care on climate and environment so much. However, the rich countries such us U.S, Japan, Russia and China have not acted sufficiently to prevent or stretch the global warming and environmental degradation because it will impact their productions. When the environmental life is degraded, the development as well the global growth will be hinder and maybe worse. some(prenominal) countries are still in deep poverty and they are being depended on agricultural and primary-product export. There are more than 1 billion people live on less than 1$ per day and the number of people live in poverty has doubled in the last two decades in Africa. In addition, 70% people live in rural in developing countries depend on agricultural and primary product exports, whose incomes are very unstable and risky. That will make the growth and development in developing countries fluctuant (Todaro Smith, 2009) and (Salvatore, 2011)There is a trend of new protectionism in advanced nations (i.e. North America and Euro) a topst the exports from developing countries. They are trying to protect their domestic producers, workers and farmers from the turn away cost products in developing countries. That will clog the free trade in the world as well as the welfare gain from exports in developing countries. For example, even though 8 liberalization round have occurred over 50 years, the trade barriers still remains in agricultural products and textile industry.Next, the population in the world is rising. That will impact and make the problems of poverty, environment and food more and more severe, especially in poor and developing countries. That is a significant factor, which will hinder and obstruct the global growth and development.Figure 2 Population Growth ( annual %)Source Derived from World Bank, World Development Indicators, http//data.worldbank.org/indicator/SP.POP.GROW, 20 March 2011Finally, due to the World Financia l and Economic Crisis in 2008 and 2009, the advanced nations go about deep recession and the developing countries face low rate of growth. Many countries such as U.S, U.K, Japan and China have to spend billions long horse to rescue their economies. The worlds GDP growth rate slows down by 2% for 2008 and 2009 (Source Derived from World Bank, World Development Indicators, 2011). In addition, the government will thin out their financial market through regulations. It will affect the manufacture, business and investment funds because they need money to expand and develop.The conclusionTo sum up, the economies in the world can reach free trade and because of free trades advantages and benefits, it is desired by countries in the world. I assert that fee trade is realistic and desirable in the real world. However, there are many serious problems that are impacting and will obstruct the global growth and development in the world. Thus, I have a pessimistic view about global growth and d evelopment.