Importance Of Trade Essay

The term trade can be defined as the transfer of the ownership of goods or services from one person to another in exchange for other goods or services or money. Trade is a backbone of a modern economy. It is not only important for developed countries but is also extremely important for the developing countries. Mentioned below are the few reasons to understand the importance of trade and also the reasons why countries should exercise trade:

*Trade allows specialization, which leads to the increase in production of the both countries engaged in trade, in this way they can exchange the goods they produce in abundance and can have the good the other country produces in abundance and also can enjoy comparative or absolute advantage.

*It creates

That is the reason Pakistan has restricted its trade through barriers such as high tariffs and non tariffs to protect the domestic industries. But during the years there were modifications in the trade policies which included the free trade with many countries.

When Pakistan liberalized its trade, it received positive response from the World bank. According to World Bank “Pakistan’s recent reforms have been substantial. Its trade regime is now one of the more open in South Asia. It has the lowest applied average tariff rates of the three large South Asian economies India, Pakistan and Bangladesh. Pakistan reached this position by reducing the number of tariff band to 25 percent.”

The government of Pakistan also removed the restriction on quantity and also from other areas that used to restrict trade. Due to this incentive full program, Pakistan’s export has risen and has contributed to enriched export performance.

The trade liberalization ran very fast in Pakistan’s economy meaning that it had a lot of positive effects in economy within a shorter period of time which has a lot of