In trade policy there have always been misunderstandings,people were most interested in the following direction. Why are those states that have huge resources, are poor before our eyes, and others that have only human resources, are rich and, and quickly. This issue is one of the most difficult, but at the same time, interesting problems in the international economy. Inside the economy, scientific trends were formed - protectionism and free trade. A supporter of free trade argue a hundredthe structure of imports and exports should form a market. And advocates of protectionism believe that the state should protect domestic producers from interference from foreign competition.
Free trade Is a principle that provides for the exchange of goods andservices between countries, exempted to the maximum extent from customs duties, tariff and non-tariff barriers. The international economy, although it can achieve an efficient allocation of its resources, a high level of its material condition, is due to free trade. But nonetheless, free trade faces a huge number of problems:
- it is necessary to provide defense. This direction, though, refers more to military-political life, but this argument must also be fulfilled from the economic side. In this case, the branches that are associated with national defense are supported by the government. And this, in turn, is the most basic reason for protecting domestic industries. This phenomenon entails great economic and social costs, which fully justify such a notion as the need to strengthen national security.
- it is necessary to increase internal employment. As many advocates of protectionism say, with its introduction, new jobs are created, while free trade can lead to unemployment. But, in fact, free trade only changes the type of employment, and does not lead to a reduction. But anyway free trade can reduce the demand for goods of somedomestic producers, and this leads to unemployment in the industries. Resources are limited and those resources that are not fully used, still do not remain unattended. It is necessary to conduct a good tax and monetary policy.
- it is necessary to diversify for the sake ofstable work. Trade barriers may be necessary for diversification, which is able to protect the domestic economy from being influenced by political international events. Also, diversification contributes to a decline in production outside of the home country, provides stability within the country. But the economic costs in this case are also inefficient and huge.
- It is necessary to protect young industries that have not yet been able to reach an economic scale. In this case, we offer protection against competition, which can come from other countries.
- it is necessary to apply a cheap workingforeign power. Many argue that with the help of protectionism, it is possible to protect domestic workers and firms from competition, which comes from all sides, in which wages are much higher. If you do not take protective measures, domestic workers can receive the same low level of wages as those who work in a less developed country.
But in general, the term free trade involves several directions:
- improving the welfare of nations, where the international specialization of production is applied;
- improving the quality of products as a result of growing international competitiveness;
- optimization of the process of resource allocation;
- contributing to the international concentration of output and production of goods.
