Why is it important for a country to be open to trade?

Consumers are able to enjoy goods in their countries, while the production occurred in a different part of the world. Thanks to trade openness, countries became able to exchange goods and products based on their needs. It is surely important for a country to be open to trade for several reasons.

Trade openness leads to an increased productivity and thus economic growth. Open markets encourage investment in sectors of each economy that has a competitive advantage. And each economy focuses on the use of its resources in areas where they have a competitive advantage compared to its commercial partners. Trade then allows both partners to make gains.

Open trade also increases investment opportunities, and these are the investments that enable to benefit from the technology and know-how of others. A significant portion of foreign investment is directly related to business opportunities, as multinationals seek suitable locations for sections of their global production networks.

In addition to what has been said, open trade promotes competition by giving local firms access to the latest equipment and to imports of high quality, and enabling them to implement best management practices and production. Additional competition fosters innovation, because producers seek to improve and differentiate their products on the market before their competitors. While new products or variations of old products are launched or improved on the market, the productivity of the economy increases.

Trade openness not only provides a higher economic growth, but it enables to get better results in the social field. The link between growth and other aspects of society, such as improved health and education, is evident by itself; economic growth allows people and governments to have the resources to tackle issues related to the social field.