Advantages that occur from opening a market to free trade:
- Increased production:
- A firms market becomes a lot bigger, which lowers average costs and increases productivity.
- Consumer benefits.
- Greater variety of goods and services, as well as lower prices due to competition.
- Employment.
- Higher employment in exporting industries.
- Production efficiency.
- Increased competition promotes new innovations and technologies for producers to produce more with the resources they have.
- Economic growth.
- Living standards and real incomes increase due to competitive industries.
- Foreign exchange gains.
- Can get other country's currency by selling goods to then import goods.
- International trade cycles can cause domestic economic instability as economies become dependent on global markets.
- International markets are not a level playing field.
- Countries with a surplus of a product may offer it for a very small price which other countries might not be able to compete with.
- Developing/new industries might have difficulty competing with global competitors.
- Pollution
- As industries compete with the market price they might not include certain production costs.
