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 Form 4 Business studies lessons and notes on international trade

Meaning of free trade and advantages of free trade

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Answer Text:
Free Trade Area
This is a situation where there is unrestricted exchange of goods and services between the countries
Advantages of free trade:
-provide a variety of goods and services at lower prices.
-free trade leads to specialization. This leads
to production of low cost goods.
-increases employment opportunities due to mobility of factors of production.
-it reduces regional difference between countries trading with each other.
-free trade creates a wider market for goods and services due to expansion of foreign markets.
-efficient allocation of resources as there is free transfer of capital which is necessary for industrialization.


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