Advantages disadvantages of sri lanka entering into free trade agreements

Moreover, most FTZs located in developing countries have export processing zones programmes to promote industrial and commercial exports.

Advantages and disadvantages of free trade for a developing economy

For instance, the inflow of necessary consumer goods, machinery and spare parts for industrial activity, and intermediate goods like textiles and oil, to one trading partner can be huge while the supply capacity of the same trading nation may be limited and cannot immediately increase to expand its exports to match the import flow. According to ILO , the total employment in zones excluding China has increased from 4. However, linkages between the domestic industry and the zones are rarely created to promote domestic industries. According to Engman et al , FTZs from an economic point of view are a sub-optimal policy because they benefit the few and distort resource allocation. In doing so, there can be instances where the trade deficit increases for one partner. It does not only help in the transfer of technology and know-how to local industries but also provide forward and backward linkages in the host economy. The first part tries to explain what constitutes free trade zone by various authorities on the subject, the types and origin of free trade zones. In an analysis on export diversification from to for selected African countries by Cling et al , FTZ-induced industrial manufacturing proved to result in diversification of exports in certain countries. According to Willmore , FTZs help governments to increase national exports at a lower cost, create employment and increase incomes. High tariffs only protect domestic industries in the short term.

Non-tariff measures are not barriers to all Sri Lankan exports, but for some of them, like marble, maggie boards, and perishable food items. These actions to protect the environment can encourage local industries to copy such practices.

free trade examples

The U. It does not only help in the transfer of technology and know-how to local industries but also provide forward and backward linkages in the host economy.

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As noted by Madanithe FTZs in the Philippines in employed aboutworkers, a significant number but amounted to only 0. One set of countries Mauritius, Dominican Republic, and China adopted EPZ policies in the early stages of their industrial development, to act as "engine of growth" by encouraging production and export diversification to propel their economies into industrialization.

advantages and disadvantages of free trade ppt

To act as engines for industrialisation and economic growth by attracting foreign direct investments. One example is the Kader Industrial factory fire in Thailand where workers died because of blocked exits and the practice of storing flammable material on the factory site Dunn,

Benefits of free trade for developing countries

The agreements provide for duty-free entry as well as duty preferences for manufactured and agricultural goods. A number of major property developments in the works, including Altair and ITC, are spearheaded by Indian financiers. Though lax regulations might make the host country more attractive to industries that entail environmental pollution, it can consequently result in creating long term health issues for the population. The feminisation of employment in the zones also offers a source of income for families and increases savings potential. These facts demonstrate that it is misleading and incorrect to claim that India has benefited much more from the FTA, merely by citing the size of the overall bilateral trade deficit. The investments of foreign capital and technology act as a catalyst that demonstrate to domestic firms and employers good practices and in some cases results in joint business ventures encouraging local entrepreneurs in developing countries. Free trade leads to depletion of timber, minerals, and other natural resources. Managerial training and skills acquired through employment in FTZ firms can be beneficial in the industrialisation process of the host. Deforestation and strip-mining reduce their jungles and fields to wastelands. Countries entering FTAs must protect their people and resources against the negative effects.
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Sri Lanka benefits from increased trade with India