Running Head: TRADE LIBERALIZATION
Trade liberalization refers to the elimination of trade barriers between countries. It thus
encourages free trade. This is enhanced through the reduction of tariffs, and non-tariff barriers.
Tariffs may include duties and surcharges while non-tariff barriers include licensing rules and
quotas. Even though there are critics of trade liberalization who assert that it costs jobs due to the
flow of cheap goods in the domestic market, evidently, trade liberalization has more benefits
than costs. Through the lowering of consumer costs and enhancing of efficiency, which are key
to fostering economic growth, trade liberalization is good for an economy. Therefore, for the
purpose of analysis, the paper will describe the impact of lower trade barriers on the price of
domestic goods and domestic producers who compete with imports. Besides, the paper will
cover economic development benefits derived from trade liberalization along with the
mechanisms that enhance trade liberalization thus promoting economic development.
Effects of lower trade barriers on the price of domestic goods
First, trade barriers entail the policies that are envisioned by the government sector of a
domestic economy. Trade barriers help in discouraging imports from the foreign sector.
Therefore, lowering such trade barriers helps in the increase of the number of goods which
consumers in the domestic market can choose from. Besides, it helps in the decreasing of the cost
of goods due to the increase in competition (Lederman, & Porto, 2015). Domestic industries...