arguments on free trade

Unit 5 Portfolio Economics Complete the following chart and answer a paragraph. (You can find information to answer this chart and paragraph in Unit 5 Lesson 10 Pros of Free Trade Cons of Free Trade How does free trade impact what you do or do not buy? Explain in a full paragraph of 3+ sentences.Evaluate the Arguments For and Against Free Trade Globalization, the Rise of the Global Economy, and International Trade Since the nineteenth century, economies and nations throughout the world have experienced increases in interactions and interconnectedness in the global economy as a result of globalization. globalization is the process of integration among individuals, corporations= and governments of different countries= driven by international trade= international investment, and information technology. Globalization trends from the nineteenth century halted during World War 1 but then reemerged after World War II. The global economy has become increasingly interconnected since. The increase in international trade through globalization has led to an increase in the ow of goods and services between nations. This has, in turn= inuenced the gross domestic product of nations as they participate more in the global economy. 9319;; r_i_c__p_i_'_o_du_c_r is the total monetary or market value of all the nished goods and services produced within a country's border in a specic period of time. As we know, the calculation of gross domestic product includes 2933.3529115: the difference between the value of all goods and services a nation exports and the value of all goods and services that it imports. "lisp 01th are goods and services produced domestically and country and purchased domestically. With the increases in international trade and its impact on gross domestic product, nations have had to develop strategies and policies geared toward managing their balance oftrade and net exports with the purpose ofmaintaining economic stability and stimulating economic growth. Some countries adopt policies and strategies geared toward pro ' .9}; which is the concept of protecting a nation's domestic industries from foreign competition by utilizing tr (1 ___b 's such as tari's, quotas= export sub sidies= and voluntary export restraints. Other nations have adopted policies and strategies geared toward _f__l'ee trade. in which international trade is not inuenced or restricted by any trade barriers and is left to follow its natural course. Consider the potential economic impacts of protectionism and free trade policies and strategies regarding international trade. Analyze potential domestic economic conditions that may lead some nations to be more inclined to implement protectionist trade policies while other nations may be more inclined to implement free trade policies. Develop arguments for each using the information presented in this lesson and throughout the unit. Evaluate the Arguments For and Against Free Trade Advantages of Free Trade As we have seen= many nations implement free trade policies and strategies such as entering into free traile__ag_i_jeui_en_t__. Free trade agreements are multinational agreements between nations that create and promote the free flow of goods and services between nations involved in the agreement without restrictions or trade barriers. Some examples of notable free trade agreements in the global economy are the North American Free Trade Agreement fl\\l_3iFT_-3i]u= the European Union= and the Asia Pacic Economic Cooperation {APEC} agreement. There are several advantages to free trade: increased economic growth= increased competition domestically and globally= lower government spending= foreign direct investment, and the improved flow of information and technology. increases in economic growth through free trade rely on the assumption that nations will enter into trade only when the exchange of goods and services is mutually benecial for both nations involved. The mutually benecial nature of international trade is based on the theory of SPHEREIfa'iW advantage. As we've learned= a nation has a comparative advantage in production when the opportunity cost of producing a given good or service is lower than the opportunity cost of producing the same good or service in another nation. Therefore, anation will export goods and services for which it has a comparative advantage and import goods and services for which it has a comparative disadvantage. This allows for spec ion in production in nations, where a nation can focus on the production of a handful of goods and rely on obtaining the rest through trade. This promotes efficiency in both domestic economies and the global market and provides the foundation for increases in economic growth through improved productivity and efficiency in production. Free trade also increases competition both domestically and globally. When free trade exists= economies throughout the world have improved access to goods and services from producers both domestically and internationally. This provides consumers with more options for consumption and promotes businesses to become more efficient= offer competitive prices= and provide higherquality goods and services. The increase in competition also provides more incentive for businesses to continue to innovate and create new products and more eicient methods for production. The increase in competition from free trade results in more highquality goods and services being available throughout the global market at lower prices. The implementation of free trade policies also reduces the level of government spending. When trade barriers exist, governments frequently subsidize domestic industries, which either increases the overall level of government spending or limits available government funding toward other programs or initiatives. When free trade exists= governments no longer dedicate a portion of their budget to subsidizing domestic industries, which frees up funds to be utilized for a variety of other programs or initiatives. Free trade also stimulates foreign direct investment. Ill-rowel 11 direct investment is investment in a particular foreign business by which an investor takes stake in ownership. This can occur when domestic businesses invest in businesses in foreign economies or when foreign businesses invest in a business in a domestic economy. increases in foreign direct investment improve access to capital, which allows businesses to expand their capabilities and production= which can expand industries and increase output, leading to economic growth. Lastly, free trade improves the ow of information and technology across nations throughout the global economy. When free trade exists= can expand their influence and develop in more countries. Multinational corporations are businesses that operate in more than one country with production facilities and.-'or offices in each country but a single headquarters or centralized ofce in one country that oversees all business operations. When multinational corporations expand their facilities into more economies internationally: they bring access to information= such as business strategies and practices as well as innovative technologies, to the economies in which they operate. This benets multinational corporations and improves efficiency and output in the economies in which they operate. Evaluate the Arguments For and Against Free Trade Disadvantages of Free Trade While free trade has many advantages. there are also many disadvantages that can lead governments and nations to favor protectionist policies regarding international trade. These disadvantages include job outsourcing, intellectual property theft, decreases in domestic industries. natural resource depletion, and reduced tax revenue. Although free trade allows multinational corporations to enter into other foreign economies and improves the flow of goods and services, this can often lead to job outsourcing. Multinational corporations frequently move production facilities to countries that have lower wages to reduce costs associated with production. This removes job opportunities in domestic economies and moves jobs to economics in which wages are lower or working conditions are not as strictly regulated. Therefore, as a result of free trade, some economies suffer unemployment and loss ofjob opportunities because ofjob outsourcing, which can prove to be detrimental to domestic economies. Free trade can also result in intellectual property theft. Many economies do not have laws and regulations that protect patents, new technologies and processes, and other forms of intellectual property. Therefore, when products or businesses enter these economies, the intellectual property can be stolen, which can result in knockoff or lower-quality products that can be produced and offered at lower prices and hurt healthy competition in economics. If consumers choose to purchase the lower-quality knockoff products, the businesses that were previously protected can be hurt. Free trade can also be detrimental to economics that are less developed. When larger businesses or corporations and their products enter less developed economics, the domestic businesses that exist can experience signicant decreases in their ability to compete and succeed in domestic industries. Oftentimes, these domestic businesses don't have access to the same production capabilities, technologies, or resources that larger businesses and corporations in more developed economies can access. This can decrease competition and lead to decreases in domestic industries as a result of free trade and lack of trade restrictions or barriers. Similar to the issues of lack of regulation regarding working conditions or intellectual pro perty, many nations and economies do not have regulations or protections in place to prevent overutilization and depletion of natural resources. International businesses that enter into these economies can then take advantage of this lack of regulation to gain access to more resources used in production and cause natural resource depletion. This not only causes environmental issues in many cases but can also limit access to resources for domestic businesses within these economies. Lastly, without the ability to utilize trade barriers and restrictions such as tariffs, governments lose access to tax revenue when free trade exists. This decrease in tax revenue results in a decreased ability of governments to provide nding and facilitate important programs and initiatives in their domestic economies. Tax revenue from tariffs often provides economies with a consistent and large source of revenue that can be diicult to replace if trade restrictions are removed and free trade policies are implemented. In your notebook, compare and analyze the advantages and disadvantages associated with free trade and the effects they have on economics throughout the global market. Compose an argument for or against free trade using the information presented in this lesson. Consider how conditions in certain economies may influence the argument for or against free trade. Present your analysis to your Learning Coach. Evaluate the Arguments For and Against Free Trade Advantages of Free Trade When governments and economies promote free trade policies and strategies, they gain improved access to goods and services throughout the global economy and increase their ability to export domestically produced goods and services. This often leads to increased economic growth, given the assumption that nations will only trade with one another when the exchange of goods and services is mutually beneficial for both nations involved. Mutually beneficial trade occurs based on the theory of AMPATATIVE advantage. A nation is said to have a comparative advantage in production when the opportunity cost of producing a given good or service is lower than the opportunity cost of producing the same good or service in another nation. As a result, mutually beneficial international trade occurs when nations export goods and services in which it has a comparative advantage and import goods and services in which it has a comparative disadvantage. This mutually beneficial trade based on comparative advantage allows Speciali we ........... in production, where a nation can focus on the production of a handful of goods and rely on obtaining the rest through trade. When nations can specialize and focus their production on the goods and services they are able to produce most efficiently, they are able to increase their output and achieve economic growth by maximizing the utilization and productivity of their available resources. With free trade, domestic economies can then export any excess goods or services that are produced and not consumed domestically. By improving economies' access to goods and services, free trade also improves competition both domestically and globally. Consumers are able to benefit from a wider variety of goods and services to satisfy their wants and needs. Therefore, businesses are faced with increased competition to sell their products in domestic economies and by exporting to other nations. This can lead businesses to continuously seek ways to improve productivity and efficiency, minimize costs, and innovate and create new products and methods for production. The higher level of competition experienced through free trade also results in more high-quality goods and services being available throughout the global economy at lower and more competitive prices. The implementation of free trade policies also reduces the level of government spending. Governments often subsidize domestic industries in order to increase the success of domestic businesses, improve total exports, or reduce the added costs of tariffs and trade barriers imposed on exported goods and services by other nations. When free trade exists, governments no longer need to dedicate a portion of their budget to subsidizing domestic industries because of the unrestricted trade and free flow of goods. This can free up government funds to be utilized for a variety of other programs or initiatives within the domestic economy- When free trade exists, international investment is increased and businesses more freely participate in foreign direct investment. Foreign direct investment is investment in a particular foreign business by which an investor takes stake in ownership. This can occur when domestic businesses invest in businesses in foreign economies or when foreign businesses invest in a business in a domestic economy. Increases in international investment through foreign direct investment allow businesses to more effectively reinvest their profits, better connect with investors internationally, and gain more access to capital. This results in greater levels of output and economic growth. Free trade also facilitates the improved flow of information and technology through increased interactions and integration amongst individuals, businesses, governments, and economies. This is often a result of the increased influence of multinational corporations. Multinational corporations are businesses that operate in more than one country with production facilities and or offices in each country but a single headquarters or centralized office in one country that oversees all business operations. When multinational corporations are able to expand their facilities into more economies internationally, they bring access to information, such as business strategies and practices as well as innovative technologies, to the economies in which they operate. This can benefit multinational corporations and improve efficiency and output in the economies in which they operate.Evaluate the Arguments For and Against Free Trade Disadvantages of Free Trade There are also disadvantages to the improved ability of multinational corporations to enter into other foreign economies. Many multinational corporations use these opportunities in other economies to lower the costs associated with production. One of the most common ways this is accomplished is by outsourcing jobs to economies in which wages are lower or working conditions are not as strictly regulated. When this occurs= the economy that initially beneted from the multinational corporations presence and production facilities will experience unemployment and loss of job opportunities as a result ofthe job outsourcing= which is detrimental to the given economy. Multinational corporations may enter new markets and economies internationally that may not have laws and regulations that protect intellectual property such as patents for products or new technologies and processes. This can pose a signicant risk to multinational corporations because their intellectual property can be easily stolen, allowing other businesses to produce knockoff or lowerquality products that can be produced and offered at lower prices and negatively impact healthy competition. A multinational corporation could suffer reduced prots and sales if consumers choose to purchase the lowerquality knockoff products. The economies that multinational corporations enter into may also lack regulations and laws geared toward protecting the environment and preventing the overutilization of natural resources. If multinational corporations choose to take advantage of this lack of re gulation= economies could experience natural resource depletion and harmful effects on the environment. Additionally, the overutilization of natural resources can negatively impact the domestic businesses that also require these resources for production. This demonstrates how multinational corporations can be invasive and detrimental to economies that may not be as developed or may not have regulations and laws in place that promote fair competition and protect the domestic economy. As a result= multinational corporations often decrease the ability of domestic businesses to compete and succeed in domestic industries. Domestic businesses in developing economies may not have the same access to production capabilities, technologies: or resources that larger businesses and corporations in more developed economies have. Therefore, free trade can hurt domestic industries and businesses by ooding the market with higher quality goods and services. Many economies also rely on government revenue from tariffs as a way to stimulate government funding and spending. When free trade is present= governments can lose access to valuable tax revenue and may be forced to limit spending or cut important programs and initiatives in domestic economies. in your notebook: compare and analyze the advantages and disadvantages associated with free trade and the effects they have on economies throughout the global market. Compose an argument for or against free trade using the information presented in this lesson. Consider how conditions in certain economies may influence the argument for or against free trade. Present your analysis to your Learning Coach