Adam Smith gives interesting idea on free trade where countries can export and import goods without any additional tariff. Tariff can be one of a country most income. But establishing free trade can deliver many benefits to the country. The following are the possible benefits we can earn from free trade.
#1. Increase on Productivity
A country commonly specializes on certain products. Free trade motivates them to be more efficient in production and more competitive in result.
#2. Increase on Efficiency
More production also makes a country invents more efficient method, and they allocate resources wisely. They commonly get the resource from other countries with lower rates for the numbers too.
#3. More Great Products
Because each country becomes more competitive, consumers will find various competitive goods as well on market. People have more and better choices on competitive rates too.
#4. More Innovation
Because the competition is tight, each country will develop their products better. They make innovation so their products can be better too. It is good news for consumers.
#5. Employment and Wages Rise
Employment opportunities on export and import business will increase. As things get better, the wages for employee will rise as well.
#6. Economic Growth
This benefit is really logical. First, people are able to purchase goods on more affordable rate. Second, it allows their wages to be more expendable.
#7. Gain on Foreign Exchange
We will literally earn foreign money by exporting goods. Later, we will spend the money to import some other goods to the country. It makes the balance.
#8. Poverty Decrease
Countries that are opened for free trade have the biggest chance to enter the global market. Eventually, this will increase county income and decrease on poverty too.
#9. Increase on Export
Other countries like to receive exports from countries on free trade. Less restriction is preferable and more beneficial. More countries will like to receive your export goods.
#10. Smaller Risk for War
Free trade makes many countries work together and as things get better, their diplomatic relation too. It minimizes the possible risk on war. Great news!
Learning the entire benefits, we must agree that free trade is a real solution for trading countries. The better people apply the free trade, the better condition will be. It also somehow empowers local people to be more productive and competitive. Let us hope free trade can be spread wider and better.