Question

Advantages and disadvantages of WTO to the Indian economy..???

Answer 1

The WTO is a body designed to promote free trade through organizing trade negotiations and act as an independent arbiter in settling trade disputes. To some extent the WTO has been successful in promoting greater free trade.

Free trade has many advantages, such as:
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Lower prices for consumers. Removing tariffs enables us to buy cheaper imports
Free trade encourages greater competitiveness. Firms face a higher incentive to cut costs. For example, a domestic monopoly may now face competition from foreign firms.
Law of comparative advantage states that free trade will enable an increase in economic welfare. This is because countries can specialize in producing goods where they have a lower opportunity cost .Economies of scale. By encouraging free trade, firms can specialize and produce a higher quantity. This enables more economies of scale, this is important for industries with high fixed costs, such as car and aeroplane manufacture Free trade can help increase global economic growth.See also: Advantages of Free Trade

Disadvantages of WTO:
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However, the WTO has often been criticised for ignoring the plight of the developing world.It is argued the benefits of free trade accrue mostly to the developed world.Free trade may prevent developing economies develop their infant industries. For example, if a developing economy was trying to diversify their economy to develop a new manufacturing industry, they may be unable to do it without some tariff protection.

Answer 2

The advantages and disadvantages of WTO to the Indian economy are:

Advantages:

• WTO promotes free trade through gradual reduction of tariffs.
• WTO also provides the legal framework for negotiation of trade disputes. This aims to provide greater stability and predictability in trade within the country.
• The WTO is committed to protecting fair competition among industries. There are rules on subsidies, dumping within the country.

Disadvantages:

• The WTO has been criticised very often for trade rules which are still mostly unfavourable towards developing countries, this is very difficult on the people of such countries.
• WTO has rules which favour multinationals and this cannot be beneficial for cottage industries. Small owned businesses have a hard time coping with the rules which favour huge companies.

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