Answer to Question #242396 in Macroeconomics for Bloy

Question

Argue how free trade rather than protectionism can favour contries

Answer 1

Free trade reduces prices by eliminating tariffs and increasing competition. Thus, reducing the cost of trading. If companies trading in several countries have to work with only one set of regulations, their compliance cost is reduced. This will make goods and services cheaper. In contrast, protectionism can result in destructive trade wars that increase costs and uncertainty as each side attempts to protect its economy. Protectionists favor big business and vested interests, as there is the availability of resources to lobby most effectively. Thus free trade favor many countries.