The growth of the global economy has created a surging demand for qualified professionals who understand the complexities of free trade and international commerce. As ThoughtCo notes, free trade refers to a largely theoretical policy in which governments do not impose tariffs or taxes on imports or exports. Hence, free trade is the antithesis of protectionism, which seeks to eliminate foreign competition. Unrestricted trade can increase the variety of goods, reduce costs, generate job growth, and improve international relations.
The College of Mount Saint Vincent’s Master of Business Administration (MBA) in International Business online program prepares professionals to maximize economic opportunities for their employers and themselves by understanding unrestricted trade between countries, including its benefits and challenges. The program’s courses — like International Economics, International Trade, and Competing in a Global Business Environment — equip graduates with global trade knowledge that will serve them in many business roles.
Benefits of Free Trade for Domestic Industries
Free global trade can benefit U.S. industries by providing access to new markets and customers and increasing competition and foreign investment, helping industries and businesses expand and create more jobs. Unrestricted trade helps to drive the adoption of new technologies and expertise developed by businesses’ multinational partners. It reduces the cost of inputs and raw materials and reduces the need for government subsidies of businesses and the corresponding taxpayer expense.
Unrestricted trade leads to increased organizational efficiency and productivity, as companies can specialize in what they do best and take advantage of economies of scale. For each country engaged in free trade, the practice can stimulate economic growth and reduce cyclicality. Consumers also benefit from more efficient and productive markets, as they have greater access to reduced prices due to lower labor costs in countries from which many products are imported.
Challenges of Free Trade for Domestic Industries
Free trade can present challenges for domestic industries in the U.S. by increasing competition from imported goods, often manufactured with lower labor costs. According to ThoughtCo, this can lead to the closures of domestic factories, facilities, and companies. Not imposing tariffs to level the playing field can lead to job loss for U.S. citizens with the outsourcing of many jobs to countries with lower labor costs.
Unrestricted trade can also lead to a loss of market share and revenues for domestic companies and a decline in the overall competitiveness of domestic industries. In addition, it can bring about a loss of control over key industries and resources and make intellectual property rights vulnerable to nations that do not have the same intellectual property protections.
Free trade can also lead to increased dependence on foreign countries for goods and services. Some of these countries may be engaged in practices unethical by U.S. standards, such as the degradation of natural resources and the environment or poor working conditions and child labor. Negative impacts on wages and working conditions for domestic workers are another chief concern in other countries with fewer labor laws.
How Does Free Trade Promote Market Fairness?
International free trade promotes market fairness by creating a level playing field for companies from different countries to compete, accomplished by reducing or eliminating tariffs, quotas, and other trade barriers that can give an unfair advantage to domestic companies. By creating open markets, free trade allows companies to compete based on price, quality, and innovation rather than protectionist policies. This leads to more efficient and productive companies and encourages companies to produce goods and services in high demand. Furthermore, international free trade also allows for more efficient use of resources and lower prices for consumers, which can lead to a higher global standard of living.
Nations participating in free trade can still create unfair barriers, such as manipulating their own currencies to impact exchange rates, dumping products at lower prices to regulate markets, and controlling the export of certain products. Sanctions, on the other hand, are an example of a fair practice meant to discourage human rights abuses, war, and atrocities, but these create barriers to free trade for the companies operating within sanctioned nations.
How MBA Graduates Ultimately Protect Future Job Growth
MBA programs can help to protect future job growth by preparing students with the knowledge and skills they need to succeed in today’s global business environment. Advanced business degrees give them a strong understanding of business concepts and practices (such as free trade) and train them in key areas such as management, marketing, finance, and accounting. Business schools also help to develop important skills like problem-solving, critical thinking, and communication — which are essential for the success of the companies that employ them.
Business schools can also foster innovation and entrepreneurship, leading to the creation of new businesses and jobs. They can also encourage students to focus on industries likely to experience growth in the future — such as technology, healthcare, and renewable energy — ensuring a steady supply of qualified workers in these areas. Business schools also facilitate networking opportunities with professionals and alumni, which help students build valuable connections in their field and access job opportunities, mentorship, and guidance.
Learn more about the College of Mount Saint Vincent’s MBA in International Business online program.