Free Trade (Cambridge (CIE) IGCSE Economics)

Revision Note

Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

The Benefits of Free Trade

  • International trade refers to the exchange of goods and services between countries

  • International trade involves the exchange of goods/service through exports and imports

  • International trade is 'free' when there is no government intervention (quotas, taxes etc.) to reduce or limit trade

A diagram illustrating benefits of trade including flow of new ideas, economic development and growth, increased efficiency, access to resources, international cooperation, and lower prices.
The benefits of free trade
  • Greater choice: with access to a wider variety of goods/services, the standard of living improves

  • Lower prices: with international competition prices fall giving households the ability to buy more

  • International cooperation: required for trade helps countries to build better relationships which leads to lower levels of hostilities

  • Flow of new ideas: innovative ideas and technology can be shared between countries

  • Access to resources: output can increase and costs of production can fall with increased access to raw materials

  • Increased efficiency: international competition allows the most efficient firms to emerge and this improves the use of global resources

  • Economic growth: exports are a key component of the gross domestic product of many countries and an increase in exports can lead to economic growth

  • Economic development: Increased output leads to lower levels of unemployment which leads to higher incomes and a higher standard of living

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Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

Jenna Quinn

Author: Jenna Quinn

Expertise: Head of New Subjects

Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.