The debate on free trade is still ongoing and there is still no single solution on the matter. Fouda (2012) states that the vast majority of economists claim that free trade is beneficial for companies, states and the world economy but public opinion remains unchanged and people still tend to believe that protectionist policies should be utilised. At the same time, there are various examples of positive effects of free trade as it enables the global economy develop. On the contrary, many protectionist laws and regulations have often led to stagnation of national economies and significant losses of companies and individuals (Chadee, Roxas & Rogmans, 2014).
Clearly, it is crucial to make people understand the benefits of free trade to enable countries to cooperate effectively. It is clear that policymakers often try to satisfy the demands of their voters who may often be mistaken. This is the case with the outcomes of free trade and due to ignorance of the topic countries still have protectionist laws that limit their capacity. Thus, it is possible to focus on such country as the UAE (where free trade has enabled the state to become one of the most significant financial hubs in the world) to prove that free trade is the key to the future global economy.
The UAE can be called a country of free trade. Almost 40 free zones exist in the state and the total estimated investment into various companies is over $21 billion (United Arab Emirates export-import trade and business directory, 2014). The Emirati economy increased by over 14% in the early 2000s (Mina, 2008). This growth is still going on. The UAE has become the leading country among states of the Middle East. These remarkable results have become possible due to the focus on free trade. The country offers no tax periods or limited taxation to companies. It is important to add that companies operating in any field can benefit from the Emirati free zones.
It is possible to illustrate benefits of free trade through analysis of an Emirati company. The al-Taweelah Power Company is one of the leading operators in the market of power supplies (UAE: How to invest, start and run profitable business in the UAE guide, 2014).
It is noteworthy that the market of power supplies is one of the most profitable in the UAE due to the rapid development of its economy. Of course, free trade policies have contributed greatly to this growth. At that, the benefits of free zones are not confined to a great potential of the local economy. The company will start a project in collaboration with foreign companies that will enable it to make significant profit. Foreign companies are invited to make bids to enter the project. These companies will enjoy the benefit of operating in the free trade economy, as they will have to pay less money in taxes.
Apart from direct financial outcomes, the al-Taweelah Power Company will benefit from collaborating with international players. The companies participating in the project will share experience and this will enable them to be more competitive in the global market. This will also positively affect the development of the Emirati economy. First, the infrastructure of the company will develop and the country will have a potent power supplies market. Secondly, the country will have another opportunity to achieve higher results in its Emiratisation program as nationals will be able to get jobs during the project. At that, locals will obtain valuable experience, which will increase the number of high-profile Emirati professionals.
In conclusion, it is possible to note that free trade is a way to remain competitive in the contemporary global market. The Emirati company mentioned above can be an example of benefits of free trade for organisations as well as the entire society.
Free trade enables companies to share experiences, access more resources (investment, high-profile employees, cheaper materials and so on) and develop new strategies. The development of companies contributes to the growth of the country’s economy as the state gets investments. New jobs are also created. The country becomes a significant player in the world market. It is necessary to note that free trade is not associated with such issues as unemployment and unequal opportunities negatively affecting local companies. On the contrary, local organisations get a chance to develop and get into a new level. More so, the market becomes more competitive, which leads to its development as companies are bound to develop new strategies and offer new products at more attractive prices.
Reference List
Chadee, D., Roxas, B., & Rogmans, T. (2014). Prospects and challenges of free trade agreements: Unlocking business opportunities in Gulf Co-operation Council (GCC) markets. New York, NY: Palgrave Macmillan. Web.
Fouda, R.A.N. (2012). Protectionism and free trade: A country’s glory or doom? International Journal of Trade, Economics and Finance, 3(5), 351-355. Web.
Mina, W. (2008). United Arab Emirates trade policy review. The World Economy, 31(11), 1443-1451. Web.
UAE: How to invest, start and run profitable business in the UAE guide: Practical information, opportunities, contacts. (2014). Washington, DC: Int’l Business Publications. Web.
United Arab Emirates export-import trade and business directory. (2014). Washington, DC: Int’l Business Publications. Web.