Free Trade in Developing Countries

Free Trade in Developing Countries

When free trade was presented to the world for the first time, it was aimed to develop growth and living standards in all over the world. However, now a considerable debate still exist for developing countries which are indicated by low gross domestic production per capita, if it works for them and whether it drives them to a brighter future or not.

According to the World Bank, the rate of poverty in developing countries declined by 14 percent between 1993 and 1998. Some expert believes free trade makes opportunity for these countries to trade and invest whatever they have advantage in, which is agriculture for most of these countries. It also enhances the living standard and power of competition as well as economic growth and creating more employment.

Controversy, some argues although trade liberalization is beneficial for poor countries in some ways, its disadvantages are more likely to make them worse. Since firms in developing countries are not able to compete with their foreign competitors, free trade drives them out of the market. The companies of developed countries tend to dominate the market since the products of developing countries are not comparable with their foreign competitors and therefore, it makes monopoly power of international large companies

NAFTA, the North America Free Trade Agreement, is a very good example of integrating of developed countries, America and Canada, and Mexico as a developing country, which illustrates not only this agreement gains any development for Mexico; but also, it has caused job losses, economic growth failure and wage losses as well.

To sum up, since there is a quite distance between the level of growth economic in developing countries with developed countries', they should not use a same method for development process, so this process should be operated in long time in order to make poor countries ready for the consequences of free trade as much as possible.

References:

1.Suri, Sanjay. "Free Trade Enslaving Poor Countries."THE STORY UNDERNEATH. N.p., 20/5/ 2007. Web. 27 May 2011. <http://ipsnews.net/news.asp?idnews=37008>.

2.Pavcnik, Nina. "Benefits and costs of free trade for less developed countries." ideas.net. N.p., 11 05 2009. Web. 27 May 2011.

<http://www.booksandideas.net/Benefits-and-costs-of-free-trade.html?lang=fr>.

3. IMF Staff, . "Global Trade Liberalization and the Developing Countries." International Monetary Fund. IMF, 01 11 2001. Web. 27 May

2011. <http://www.imf.org/external/np/exr/ib/2001/110801.htm#ii>.