Question

Does import/export establish a relationship? do imports take away jobs? what are long term and short term benefits for international trade? who profits mostly from imports/exports? what are the aspects of free trade?

Answer 1

Does import/export establish a relationship?

Yes it does. Example- India and China have a good amount of trade.

Do imports take away jobs?

Not necessarily. It is observed that free trade brings latest products and technology with it and makes host country change its outdated business practices. Survival of the fittest is ensured. Host country companies also show the will to change. Example- India, South Korea. Countries do protect domestic companies through different protectionist policies like tariff quota or subsidy etc. Hence it will not be correct to say that jobs are lost. many jobs are created through technology transfer and outsourcing to cheaper cost centers. Example- in India after liberalization in 1991, growth rate increased from around 3% to 7 % and new kind of jobs generated.

what are long term and short term benefits for international trade? who profits mostly from imports/exports? what are the aspects of free trade?

Shot term benefits: 1.technology transfer 2. employment generation 3. Opening international market for home country products

Long term benefits: 1.Economic growth 2. Reduction of conflicts between two or more countries 3. Proper allocation of scarce resources.

A country which has more adaptibility to changing business environments and has innovative products with positive brand image products benefits.

Free trade has aspects: Govt. may not need to take action to promote free trade but there can barriers put to protect jobs as discussed earlier. free trade countries have high growth rates and enjoy competitive advantage. Free trade agreements also make finance flows smoother in between countries.