Trade had always been the key factor to county's developments and growth. However, trade and economic regimes has been manipulated by powerful countries so well that not all countries benefit from trade. In fact, for most of the times only the powerful countries benefit from trade. So the question is, how to change that?
Two types of trade, fair trade and free trade, each with it's ow flaws and benefits, will help us answer that question. Due to comparative advantage, competition, and the avoidance of trade barriers between countries, free trade can lower the costs of goods for consumers. This leads to economic growth in countries because there are greater profits, reinvestment, and employment. However, free trade also leads to some negative effects. For example, countries will be dependent on a few products, making themselves vulnerable. There is also the problem of outsourcing to lower labor costs. The labour and environmental standards in countries will also be lowered. In general, rich and powerful countries benefit the most from free trade.
Fair trade then sought to tackle and solve these problems. Fair trade aims to create more equitable trading conditions in order to help the disadvantaged producers in LEDCs. Because of fair trade, producers will receive fairer prices and higher returns. Fair trade also seeks to help eliminate forced labor and child labor. One method of eliminating the costs in trade is to fewer the links in the supply chain. However, there is the lack of oversight in fair trade and it may hurt other farmers.
In the current economic system, it's impossible to eliminate the negative effects of trade due to the dominance of powerful countries. But through reciprocity, there's still hope for the LEDCs and the minority to gain a voice and improve their current situations.
Two types of trade, fair trade and free trade, each with it's ow flaws and benefits, will help us answer that question. Due to comparative advantage, competition, and the avoidance of trade barriers between countries, free trade can lower the costs of goods for consumers. This leads to economic growth in countries because there are greater profits, reinvestment, and employment. However, free trade also leads to some negative effects. For example, countries will be dependent on a few products, making themselves vulnerable. There is also the problem of outsourcing to lower labor costs. The labour and environmental standards in countries will also be lowered. In general, rich and powerful countries benefit the most from free trade.
Fair trade then sought to tackle and solve these problems. Fair trade aims to create more equitable trading conditions in order to help the disadvantaged producers in LEDCs. Because of fair trade, producers will receive fairer prices and higher returns. Fair trade also seeks to help eliminate forced labor and child labor. One method of eliminating the costs in trade is to fewer the links in the supply chain. However, there is the lack of oversight in fair trade and it may hurt other farmers.
In the current economic system, it's impossible to eliminate the negative effects of trade due to the dominance of powerful countries. But through reciprocity, there's still hope for the LEDCs and the minority to gain a voice and improve their current situations.