#TRADE BLOCS ADVANTAGES DISADVANTAGES FULL#
#TRADE BLOCS ADVANTAGES DISADVANTAGES FREE#

#TRADE BLOCS ADVANTAGES DISADVANTAGES FREE#

Disadvantages of Free Trade:Д«ut, free trade is opposed on several grounds. It is also immune from such abuses as вЂcorruption and briberyвЂ™ and the creation of vested interests which often arise under a protectionist system. (h) Evil Effects of Protection:ДЇree trade is also advocated because it can remove the evil effects of protection, such as high prices, growth of monopВolies, etc. Again, as under free trade each country produces those goods in which it has the best advantages, the resources (both human and material) of each country are utilised in the best possible manner. (g) Higher Efficiency and Optimum Utilisation of Resources:ДЇree trade stimulates home producers, who face to foreign competition, to put forth their best effort and thus increase managerial efficiency. On account of free trade the consumers of the different countries get the best quality foreign goods, often of a wider range of choice, at low prices. It would increase the productivity of each factor. (e) Higher Earnings of the Factors of Production:ДЇurthermore, free trade increases the earnings of all the factors as they are engaged in the production of those goods in which the country has comparative advantage. This often produces a better understanding among those countries and leads to amity and theory reduces the possibility of commerВcial rivalry and war. For example, the European Union now not only deals not only with trade partnerships, but also with human rights, consumer protection and greenhouse gas emissions. International trade and commercial relations often lead to an interchange of knowledge, ideas and culture between nations. A trading bloc is likely to lead to at least partial loss of sovereignty for its participants. Free trade is often an efficient way of breaking up domestic monopolies. Thirdly, if there were no international competition, the home market would be so narrow that it would be comparatively easy for the combinations of firms in many indusВtries, e.g., motor cars, paper and electrical goods, to exercise some control over it. (c) Safeguard against the Advent of Monopolies: So, free trade increases the world production and the world consumption of internationally traded goods as every trading country produces only the selected goods at lower costs.

#TRADE BLOCS ADVANTAGES DISADVANTAGES FULL#

If certain goods were produced only for the home market, it would not be possible to achieve the full advantage of large-scale production. International trade permits an industry to take full advantages of the economies of scale (large-scale production). (b) Increase in World Production and World Consumption: Second, specialisation leads to an increase in total production. Thus, Iceland would have no coal, Nepal no oil, Spain no gold and Britain no tea. Natural disasters such as floods caused by tropical cyclones and frequent droughts have had adverse effects on the economies of these countries.If there were no international trade, many countries would have to go without some products.There is still a heavy dependency on South Africa in areas of transport and mining.Wide regional disparities and general trade dependency on developed countries makes regional intergartaion difficult.A disruption of trade within a trading bloc as a result of a natural disaster, conflict or revolution may have severe consequences for the economies of all participating countries. By flooding the regional market with cheaper goods, South Africa may indercut smaller and less efficient industries within the region for example the Textile and footwear industries in Zimbabwe. Because trading blocs increase trade among participating countries, the countries become increasingly dependent on each other. South Africa is the most economically advanced country within the region and it dominates the flow of goods to other countries.This has often caused some friction between member states for example Zimbabwe and South Africa and Zimbabwe and Botswana. Countries still maintain complex tariff and trade regulations. There is no free movement of goods among member states.These countries also have serious problems of foreign debts. Most countries are generally poor and rely heavily on agriculture and international aid.Land reform programmes in Zimbabwe and the subsequent negative publicity has eroded ZimbabweвЂ™s capacity to promote food security. Political instability in some member states for example, Angola whose economy has been destroyed by many years of internal civil wars.Problems of regional integration within SADC There are good prospects for expanding the transport infrastructure linking all member states.If exploited fully these would stimulate rapid economic growth within the region. Jointly, the countries have a diverse resources base.The countries collectively from a large regional market.

Trade blocs advantages disadvantages