Examining the Benefits and Fairness of Free Trade in Global Business

This report examines the concept of free trade and its significance within the global business environment. It begins by defining free trade and explaining its core principles, including the absence of trade restrictions and the role of comparative advantage as a driver of economic efficiency. The report discusses the assumptions underlying free trade models and the benefits of free trade, such as increased economic growth, reduced government spending, and enhanced opportunities for businesses. The report further explores how free trade enhances the product variety, reduces costs, and improves the working patterns of employees. The report concludes that free trade is fair and beneficial in many ways, due to the presence of market competition, which ensures that both buyers and sellers can benefit from the trade. The report also references the work of Bieler, Raynolds, and Yarbrough & Yarbrough.

Running Head: Global business environment
Global Business Environment

Global business environment
Free trade Fair
Yes free trade is fair. The term free trade refers to a policy that is followed in the international
market; in this the countries and the government do not take into consideration the restrictions on
exports to other countries. It was established in the open markets. There are many advantages
that are seen by taking into consideration free trade. One is the absolute advantage in which
Smith suggested that it was not at all possible for all the nations to become rich by following
mercantilism. This is because if export is done then it is import for other nation, so if all the
nations take into consideration free trade then it will be beneficial for them to sustain the market.
The second advantage of the free trade is comparative advantage in which one can easily
compare the opportunity cost of producing goods in many countries. The law and principles that
are closely related comes under comparative advantage and in this the agent will produce more
and the consumption will be low (Bieler, 2016).
It is seen that free trade is globally beneficial. There are many unrealistic assumptions seen by
taking into consideration simple model. The assumptions that are assumed in the simple world
can be that there are only two countries but in the real world there are many countries and goods.
The next assumption that is assumed is the income effect which is based on the income
distribution within a country. There are many assumptions which are considered under simple
model. So by these assumptions it is seen that free trade is beneficial in the real world in which
many countries, goods, resources and rates are involved (Yarbrough and Yarbrough, 2014).
There are many benefits that are seen by taking into consideration free trade fair. The advantages
of benefits that are analyzed are that the business climate has become more dynamic. The
businesses have the motivation now to become the global competitors in the market. The second
advantage that is seen is increased economic growth. In this the economic growth has taken rise
and is increased in effective manner. The spending is also reduced by considering the
government. There are many other subsidiaries that are removed and funds are put for the use.
Also there are many markets that rely on farming for the employment. So by this enhancement is
seen in the income level of the farmers. Business can easily expand and achieve their goals and
objective by considering free trade (Raynolds, 2014).

Global business environment
Free trade fair also increased the product variety and reduced the cost. In this the goods are
available in the global market. It has also enhanced the working pattern of the employees. Free
trade means anyone can easily trade with each other in effective manner. The fairness of the
trade depends upon the competition in the market between the buyers and the sellers. So by this
we can easily say that free trade is fair and provide benefits in many ways.

Global business environment
References
Bieler, A., 2016. From ‘Free Trade’to ‘Fair Trade’: Proposals for Joint Labour Demands towards
an Alternative Trade Regime. Challenging Corporate Capital: Creating an Alternative to Neo-
liberalism, pp.31-41.
Raynolds, L.T., 2014. Fairtrade, certification, and labor: global and local tensions in improving
conditions for agricultural workers. Agriculture and human values, 31(3), pp.499-511.
Yarbrough, B.V. and Yarbrough, R.M., 2014. Cooperation and governance in international
trade: The strategic organizational approach. Princeton University Press.