Development / Free Trade

Increased Resources

Developing countries can benefit from free trade by increasing their amount of or access to economic resources. Nations usually have limited economic resources. Economic resources include land, labor and capital. Land represents the natural resources found within a nation’s borders. Small developing nations often have the lowest amounts of natural resources in the economic marketplace. Free trade agreements ensure small nations can obtain the economic resources needed to produce consumer goods or services.

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Improved Quality of Life

Free trade usually improves the quality of life for a nation’s citizens. Nations can import goods that are not readily available within their borders. Importing goods may be cheaper for a developing country than attempting to produce consumer goods or services within their borders. Many developing nations do not have the production processes available for converting raw materials into valuable consumer goods. Developing countries with friendly neighbors may also be able to import goods more often. Importing from neighboring countries ensures a constant flow of goods that are readily available for consumption.

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Resources

The ability to trade freely can help a country greatly increase its wealth. At the same time, the country may, in turn, deplete its natural resources. Natural resources can be the primary and most valuable export in many countries. A few examples include Saudi Arabia and oil, South Africa and diamonds, and Brazil and lumber. According American University, Brazil's lumber exports equal five percent of the world's supply and are significantly responsible for the deforestation of the Amazon. Fewer constraints on trade may lead countries to tap into more of these precious resources.

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Adverse Working Conditions

As underdeveloped countries attempt to cut costs to gain a price advantage, many workers in these countries face low pay, substandard working conditions and even forced labor and abusive child labor. This “race to the bottom,” as critics call this drive to cut costs at the expense of human rights, is a key target of protests aimed at the WTO. Yet the WTO states it does not consider a manufacturer’s treatment of workers reason for countries to bar importation of that manufacturer's products. The WTO notes developing countries insist any attempt to include working conditions in trade agreements is meant to end their cost advantage in the world market.

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Better Foreign Relations

Better foreign relations is usually an unintended result of free trade. Developing nations are often subject to international threats. Developing strategic free trade relations with more powerful countries can help ensure a developing nation has additional protection from international threats. Developing countries can also use free trade agreements to improve their military strength and their internal infrastructure, as well as to improve politically. This unintended benefit allows developing countries to learn how they should govern their economy and what types of government policies can best benefit their people.

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Environmental Damage

According to critics, the increase of corporate farms in developing countries increases pesticide and energy use, and host countries ignore costly environmental standards. The Global Development and Environmental Institute, however, finds the environmental impact mixed. In some countries, for instance, replacing native crops with coffee and cocoa trees reduces erosion. The WTO is criticized for not allowing barriers to imports based on inadequate environmental standards in countries where goods are produced. Yet the WTO points to its ruling in the 1990s allowing a U.S. ban on shrimp imports because the fishing methods threatened endangered sea turtles outside U.S. borders. The extent to which environmental standards should be considered in free trade is an ongoing debate within the WTO.

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Production Efficiency

Developing countries can use free trade to improve their production efficiency. Most nations are capable of producing some type of goods or service. However, a lack of knowledge or proper resources can make production inefficient or ineffective. Free trade allows developing countries to fill in the gaps regarding their production processes. Individual citizens may also visit foreign countries to increase education or experience in specific production or business methods. These individuals can then bring back crucial information about improving the nation’s production processes.

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Use of Fuel

In a free trade environment, goods from anywhere can go anywhere. So, in the end, more things are moving to more places. While this can have very positive effects on consumer choice and prices, it means that there is more transportation involved--which burns more fuel and therefore impacts air pollution. For example, if a consumer in France used to have only one kind of local lettuce, but now, under the EU, can choose among five kinds of lettuces from five different countries, a lot more fuel is being burned per French salad. Because of rising emissions related to agricultural and food transport, the EU is considering taxes on emissions and freight related to food transport to deal with the growing environmental impact.

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Increased Life Expectancy

An increase in employment levels, incomes, and the general standard of living alleviates hunger and lack of medical care in developing countries. Preventative medical care including checkups and vaccinations are available to more of the population. It also increases the number of children who are educated and attend school regularly. The ultimate result is an increase in the average life span and a reduction in infant deaths.

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Higher Employment Rates

As developed countries are able to move their operations into developing countries, new job opportunities open up for local workers. Increased levels of employment lead to a higher standard of living and more consumer purchasing. This ultimately sparks the country's economy and may help to develop locally owned business.

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