Question

You are an adviser to the Indian government. Until now, government policy in India has been to severely limit imports into India, resulting also in a low level of Indian exports. The government is considering a policy shift toward much freer trade. What are the three strongest arguments that you can offer to the Indian government about why the policy shift to freer trade is desirable for India

Answer 1

Answer:

1. The size of the economy as a whole grows as a result of free trade.

2. Consumers benefit from free trade.

3. Free trade can reduce cost of trading:

Explanation:

The three strongest arguments that you can offer to the Indian government about why the policy shift to freer trade is desirable for India are as follows:

1. The size of the economy as a whole grows as a result of free trade: It provides for more efficient production of goods and services. This is because it encourages goods and services to be created in areas with the finest natural resources, infrastructure, or skills and experience. It boosts productivity, which can lead to greater long-term wages. There is universal consensus that growing global trade has boosted economic growth in recent decades.

2. Consumers benefit from free trade: By removing barriers and promoting competition, it lowers prices. Quality and choice are likely to improve as a result of increased competition.

3. Free trade can reduce cost of trading: Non-tariff barriers can be reduced, resulting in less red tape and lower trading costs. Companies that deal in multiple nations might reduce their compliance expenses by working with a single set of laws. In principle, this will lower the cost of goods and services.