Fair Trade and its Benefits 'Fair trade is a method to business and to development built on dialogue, transparency, and respect that seeks to create greater justness in the international trading system. Fair trade supports farmers and craftspeople in developing countries that are socially and economically marginalized. These producers lack economic chance and often face steep hurdles in finding markets and customers for their goods '. (Anon, n.d). 'So, fair trade is primarily addresses goods produced in developing countries and sold to developed countries '.
According to David Ricardo, free trade promotes specialization, it enables domestic workers to concentrate those good and services they have competitive advantages with. In simpler words, business does what they are good at and kaizen applies to this strength to further strengthen their advantages. 3. FREE TRADE AREA (FTA) A free trade agreement is a set of policies set by 2 or more countries that have few or no price controls in the form of tariffs or quotas between each other. Free trade agreement allows the agreeing nations to focus on their comparative advantages and to produce the goods they are comparatively more efficient at making, thus increasing the efficiency and profitability of each country.
Bilateral trade agreements are between two nations at a time, giving them favored trading status with each other. The goal is to give them expanded access to each other's markets, and increase each country's economic growth. This type of trade agreement standardizes business operations, in an attempt to level the playing field and also it keeps one country from stealing the other's innovative products, dumping products at cheap cost or using unfair subsidies. These agreements also standardize regulations, labour standards and environmental protections. Last, but certainly not least, they eliminate tariffs and other trade taxes.
Using Kimberly Amadeo’s words, “ a market economy functions through competition”. Competition has its own advantages which include but not limited to production of goods and services in a more efficient way to maximize profits, rewarding of innovation, improved quality of goods and services being offered and also accumulation of capital. The demerits include disadvantaging the less privileged in society who are naturally unable to compete. Examples of the underprivileged include the elderly, children, and mentally or physically challenged people and the caretakers of such people are also disadvantaged because their energies and skills are taken up with caretaking, not competing. In a nutshell, free market favors those who are good at
classical model of David Ricardo’s theory of comparative advantage (CA). This argues that all countries have the ability to thrive by taking advantage of their assets and determining what they are best at producing and then trading their best products for other products that are more efficiently produced by other nations (Ruffin, 2002, p. 729). Those who are for CA point out that there are multiple benefits to this concept that can lead to development growth. Their faith aligns with liberal methods and policies, as liberalizing trade offers a winning scenario to all those involved by creating a more economically efficient system, producing more with less input thus saving time (Higgott & Weber, 2011, p. 435). The increase in transactions between nations also leads to an increase in peaceful interaction and interdependence between WTO members.
And fair trade is granting the authority for poor people by Oxfam. Fair trade is established essentially as alternative of conventional trade to provide livelihood methods and improvement chances to people throughout poorest countries to keeping them survival. Fair trade aims adopt two types of standards , a consistent standard for the level of values and principles and a flexibility standard for implementations level, therefore that show the barriers in defining the concept in both concrete and practical processes, which can applied universally. Fair trade principle and values let consumers to choose and buy fair trade products from a wide range of great products, and that allow consumers to contribute by positively way in
Global Issues: Mid-Term Reaction Essay Globalization is defined as the free flow of goods and services, which promotes free trade. What helped me grasp the significance of globalization was its complexity. I learned that globalization is not a one sided issue, but multi dimensional with pros and cons. On the positive side, globalization promotes free trade, or the free exchange of goods and services among countries. This reduces deep poverty by increasing wealth for all nations.On the negative side, globalization can also hurt the environment because middle classes are big consumers of natural resources.
1. Introduction The European Commission considers free competition between companies as vital for market economy. Free competition leads companies to offer the best goods or services at the lowest prices. Hence, in a free competitive market, consumers are more likely to pay less for more quality. However, some companies try to limit this free competition by fixing higher prices, limiting production or sharing markets and consumers between them.
Free market economies promote competition and therefore low prices and furthermore encourages innovation and constant improvements to further satisfy consumer needs, it also provides consumer sovereignty and resources are allocated towards consumers wishes. Failure of the free market economies arises from the disregard of private firms negative effects on economic welfare example some socially desirable goods may not be provided such as education and healthcare due to its lack of profitability, and overproduction of socially undesirable goods such as alcohol and cigarettes. On the other hand planned market economies can prevent abuse of monopolistic structures and mass unemployment a feature common in free market structures and they promote socially beneficial goods and services and demote socially undesirable
Advantages of Multinational Corporations: • Cheap Labour One of the advantages of multinational corporations is the opportunity to expand to countries where labour is less expensive. This is one of the benefits that smaller companies do not have at their leisure. Multinationals can distribute up their offices throughout several countries where demand for their services and products are high while cheaper labour is available. • Broader Market Base By opening business or offices in several countries, multinationals increase their chances of reaching out to customers on a global scale, a benefit which other companies like limited to regional offices and establishments do not have. The access to a greater value of consumers gives them more opportunities to develop and alter their products and services that will be appropriate to the needs of potential customers.