International Trade and Investment

The international trade has consequently increased trade between different countries all over the world. This is mainly because of trade agreements and technological advancements in the world. In the year 1970, the value of world exports was 0.4 trillion dollars, thirty years later, the world exports more than tripled, reaching 10.8 trillion in the year 2004 ((n.w), 2007). Trade agreements have consequently allowed most countries in the world to be able to trade freely, hence increasing trading activities in the world.

Industrialization, which is a very significant factor when it comes to trading, has also helped in the mass production of goods, hence leading to huge exports ((n.w), 2007). In as much as free trade has been able to increase international trade, the proponents of free trade continue to argue that free trade has major disadvantages than advantages. Developed countries, are highly industrialized, thus making them to easily produce manufactured products, which cannot be matched by developing countries, due to poor industrialization. This consequently makes developing countries, to rely on imports of manufactured goods from developing countries.

Developing countries, tend to have more unskilled labor than skilled labor, thus making them to rely on the export of agricultural products. Due to the huge production of industrial products such as sugar by developed countries, developing countries tend to export products such sugar at very cheap prices, leading to the closure of sugar factories in developing countries. Most people consequently lose their jobs, thus making it hard for the developing countries to be able to grow their economies ((n.w), 2007). In short, free trade consequently leads to a trade imbalance, since one of the trading countries tends to suffer, while another one enjoys. Another example is between China and the US, both countries are developed and they may be able to produce similar products. However, products manufactured tend to be cheaper as products manufactured in the US, due to free trade, most people from the US, will tend to buy products from China, thus leading to the closure of manufacturing companies in the US.

Reference

(n.w). 2007. How Beneficial is World Trade? Retrieved from: https://www.youtube.com/watch?v=xRJZWfqWcs0&list=PL37FE6E9923610890