Which of the following is NOT an advantage of international trade? a) Increases the variety of goods and services. b) Increases national income and improves the standard of living. c) Increases competition and hence improves the quality of products. d) To protect infant industries.
The correct answer and explanation is:
Correct Answer: d) To protect infant industries
Explanation:
International trade refers to the exchange of goods and services across national borders. It offers numerous benefits to countries involved, such as increased access to goods, economic growth, and enhanced efficiency in production. However, not every aspect linked with trade is considered an advantage.
Option a, “Increases the variety of goods and services,” is a clear benefit. Through trade, countries can access products not produced locally, such as tropical fruits in cold countries or high-tech equipment in developing economies. This variety improves consumer satisfaction.
Option b, “Increases national income and improves the standard of living,” is another advantage. Countries that trade effectively can specialize in goods where they have a comparative advantage. This boosts productivity, increases GDP, and ultimately raises the standard of living of citizens through more jobs and better access to goods.
Option c, “Increases competition and hence improves the quality of products,” also reflects a benefit. When foreign products enter domestic markets, local producers are pushed to improve product quality, reduce costs, and innovate in order to stay competitive. This competition benefits consumers.
Option d, “To protect infant industries,” is not an advantage of international trade. In fact, it is often cited as a reason against free trade. Protecting infant industries usually involves tariffs, quotas, or subsidies aimed at shielding young or emerging domestic industries from foreign competition. While this protection might be necessary in the early stages of development, it is not a benefit of international trade. Rather, it limits trade and may reduce efficiency, raise consumer prices, and delay innovation.
Therefore, the correct answer is d because it represents a trade barrier rather than an advantage of engaging in international trade.