1.0 Introduction

This report aimed to discuss the effect of free trade for the country’s economy, so free trade is a system in which goods, capital, and work flow freely between nations, without barriers which could delay the trade process. Actually, many nations have free trade agreements, and some international organization promotes free trade between their members. Because of free trade provide lower prices for goods and services by promoting. However, there are a number of quarrels both for and against this practice, from a variety of economists, politicians, industries, and social scientists. According to Tom Chmielewski (2014), a lot of economists approve NAFTA has caused some general enhancement in US jobs, but with bad effects. Free trade can cause disorder in parts of a national economy, for instance long-established industrial slices already in a weak position to global competition. Besides that according to Edward Alden, a researcher at CFR, wages have not kept pace with output of work, and income unfairness, and these phenomena indicate that trends speeded to some range of free trade. Due to this information, this report will research the relationship between free trade and economy, and find out the economic impact of the free trade.

2.0 Free trade does add wealth to the economy

Free trade promotes innovation and competition. Free trade is a kind of really fair trade because it offers customers the most choices and the best chances to improve the standard of living. Free trade fosters competition, spurring companies to introduce and develop better products and to take more of their goods and services to market, keeping costs low and quality high in order to retain or increase their market share. By fostering opportunities for the country businesses, free trade rewards risk taking by increasing gross revenue, profit margins, and market share. The companies can opt to build on those profits by spreading out their operations, putting down new market sectors, and creating better paying occupations. Free trade, reinforced by the dominion of law, removes such incentives for corruption by spurring economic growth, increasing the number of better paying jobs, and finally increasing the level of prosperity. Free trade policies can also attract Higher Foreign Investments, free markets encourage more investment in the land. Foreign directed investment goes to where capital is needed, improving productivity and driving increase in many nations. However, for the economic, nowadays the most important feature is economic globalization. Economic globalization can be determined as the procedure by which markets and output in different nations are becoming increasingly interdependent due to the Dynamics of trade in goods and services and flows of capital and technology. The acceleration of free trade can bring down the tariffs and eliminate discriminatory treatment in international trade. Developing countries open up many types of free economic zones in ports and traffic areas in order to build up the economy and promote its exports. For example Shanghai free trade zone, NAFTA.