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Trade Liberalization Analysis

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ABSTRACT
This research paper analyzes Singapore and Sri Lanka’s trade policies that both uses trade liberalization to attain trade openness and to expand or diversify in varieties of products so that economic growth is achieved. This leaves no gap or special treatment to domestic producers and foreign producers are free to trade their products freely amongst nations. This research also examines how this trade policy affects the likelihood of the two nation’s economic well beings and the determination of past trends in the growth of trade. Likewise, safety measures undertaken by this two countries to protect them from potential threats but at the same time, maintaining good foreign relations with numerous trading partners.
INTRODUCTION
Trade …show more content…

Real Gross Domestic Product (GDP) per capita, that is, GDP per capita adjusted for inflation, is often used as a proxy for the standard of living in different countries.
One factor that frequently cited as a possible source of economic growth is international trade. Therefore, ways in which a country’s exposure to international trade is referred to as “trade openness” that basically resulted in promoting growth in the …show more content…

1. Price Levels
The fluctuations of prices domestically and internationally will actually change the prices that are borne by individual consumers. The variations in the price level are determined by competition, roles or functions of government institutions and also the expansion of trade.
2. Economic Activity
The transfer of resources between industries is often accompanied by trade liberalization and has a significant impact on employment and income. Thus, households are affected by the profits generated. That is, if income is flexible, there is full employment, and then variations in the price level will affect wages while employment remains unchanged. Alternatively, if there are a lot of movements by labors in and out of the economy then trade liberalization will change the level of employment.
3. Taxation and Government Expenditure
Trade liberalization may lead to the loss of government revenues as taxes are reduced or removed, and that in effort to maintain stability on overall economy, governments may reduces social expenditures to generate new taxes which could unduly affect the poor

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