International Trade Flashcards
Free Trade and Trade Liberisation
Free trade, and the movement of trade liberalisation, involves the global movement over recent decades towards the removal of barriers to free trade such as tariffs, quotas and protections to local industries so as to encourage flows of goods and services, income and people between countries.
Few economics disagree that international trade strengthens nations.
Impacts of Increased Trade
- Lower Prices for Consumers
- Greater Choice
- Access to resources
- Economies of scale
- Increased Competition and Efficiency
Lower Price for Consumers
The increase in competition from overseas businesses to lower their prices to compete. Additionally, trade gives Australians access to cheap goods and services overseas.
Greater choice of goods and services
Australians rely heavily on imported goods (such as medicine and technology), which would not be available without international trade.
Access to resources
Trade gives Australia more access to goods and services that otherwise would not be available. We mostly import capital resources but also petrol and have high immigration.
Economies of scale
By opening up borders to trade Australian businesses can sell to a much larger marketplace. This allows businesses to spread their fixed costs across a much greater volume of sales thus reducing the cost per unit.
Increased Competition and Efficiency
The most important benefit is that drive increases competition between global firms. This will improve productivity and lower costs. This is good for consumers’ access to goods and services.
