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Free Tr. vs Protection

Free Tr. vs Protection

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Published by a_mohapatra55552752

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Published by: a_mohapatra55552752 on Nov 12, 2009
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Free Trade. Vs ProtectionDr. Mrutyunjay Dash
Free Trade
It refers to a condition of international trade, when all kindsof artificial controls on international trade, such as tariffs,quotas, etc. are absent.Under free trade, the distinction betweendomestic trade and international trade disappears.Arguments in Favour of Free Trade:
Optimum allocation of Resources
Under free trade, every country specialises only in theproduction of those goods in which it has comparativeadvantage. This leads to proper and most efficient use of productive resources of the world.Technical Reasoning:To avoid misutilisation of resources on the production of those items over which the country has comparativedisadvantage.
Optimisation of Consumption
Free trade helps the trading countries to secure the optimisationof consumption. In the absence of international trade, acountry’s domestic consumption is limited to its
 production possibilities.
But through international trade, the consumption possibilitiescan expand
 production possibilities
 Benefits to Consumers:Free trade also benefits the consumers by enabling them toenjoy the large variety of foreign goods which their owncountry cannot produce.
 Economic Development :
 Encourages specialisation and division of labour 
 Stimulates healthy competition
 Increases skills, technical know-how 
 Makes available necessary raw materials, machinery and  foreign capital.

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