The impact of trade freedom on the economy is mainly reflected in the following aspects:
1. The impact on economic efficiency.
In general, liberalization of service trade is conducive to improving the economic efficiency of developing countries, which is mainly reflected in the following aspects:
1. Due to the entry of foreign service providers into the market , enterprises in developing countries can have more opportunities to choose high-quality and low-cost services, and improve the economic benefits of enterprises.
2. Developing countries can import productive services that are urgently needed for economic development but cannot meet the demand in their own countries, thus helping to solve the contradiction between production development and backward service industries.
3. Competition from foreign enterprises will force service enterprises in developing countries to align themselves with the international advanced level, absorb foreign advanced service technology and experience, strive to reduce costs, improve quality and competitiveness, and enter the world market.
4. It is conducive to developing countries to develop their own service industries with advantages and import services that do not have comparative advantages, thereby promoting the effective allocation of economic resources and creating more opportunities for the export of service industries with advantages in developing countries. Lots of opportunities.
2. Impact on the balance of payments.
The impact of liberalization of trade in services on the balance of payments is twofold:
1. As developing countries reduce restrictions on service imports, imports may increase significantly in the short term, resulting in The international balance of payments deteriorates;
2. Developing countries can use the liberalized international environment to try to expand their service exports. With access to high-quality and low-cost import services, developing countries have the potential to reduce the cost of their material products, improve their quality, and enhance the international competitiveness of their exports of goods, thereby increasing their incomes. At the same time, moderate opening of the financial services market will also facilitate the inflow of foreign capital and improve the international balance of payments.
3. Impact on technological progress.
The liberalization of service trade can promote technological progress in two main ways:
1. Service trade itself can become a channel for technology transfer. Since technological progress often occurs first in the service field, developing countries can obtain advanced technology and other information through technology introduction, consulting, training and other technical services. At the same time, foreign direct technology investment in the service industry is often accompanied by certain technology transfers.
2. The pressure of international competition will force the service industries of developing countries to accelerate technological progress to improve competitiveness, and thereby drive technological progress in other sectors. Of course, liberalization of services trade may also have a negative impact on technological progress.
4. Impact on labor and employment.
The service industry in developing countries has low labor productivity, high labor intensity, poor labor quality, and difficulty in transferring to other sectors. Therefore, the liberalization of services trade may worsen the employment situation of domestic service industries and related material production sectors, and may also affect the high-tech service sectors that have not yet grown in developing countries.
5. Impact on economic security.
The impact of liberalization of services trade on the economic security of developing countries is mainly reflected in two aspects:
1. The impact on the country’s economic independence and economic sovereignty. Liberalization of services trade may weaken the economic independence of developing countries. The reason is that first of all, the commitment to liberalization of services trade will cause developing countries to lose some of their economic decision-making autonomy to a certain extent, especially those of developing countries. Certain vital service industries. Secondly, competition from foreign services may inhibit the development of weak emerging service industries in developing countries, especially high-tech producer services and related high-tech industries, making it difficult for them to improve their industrial structures and thus compete in high-tech services. rely on developed countries.
2. Impact on the stability of economic development. The stability of economic development is linked to independence. Unreasonable industrial structure and high dependence on foreign countries will affect the long-term stable development of the economy.
6. Influence of restrictive factors.
Through the above analysis, it is not difficult to see that the impact of liberalization of service trade on the economic benefits of developing countries is more good than harm, but the impact on economic security is more harm than good. It should be pointed out that when making trade-offs, developing countries must not only conduct theoretical reasoning and analysis, but also take into account practical constraints.
Because these factors have a substantial impact on the fate of developing countries in the process of liberalization:
1. The constraints of the international economic environment. Liberalization of services trade can provide developing countries with more and better services to improve the competitiveness of developing countries' export commodities. However, in actual economic life, the areas where developing countries have the strongest export competitiveness are often the areas where developed countries have the strongest trade protectionism. Therefore, the benefits that developing countries should receive due to improved export competitiveness may be largely offset by the trade protectionism of developed countries. Technology protection in developed countries also limits, to a certain extent, the benefits of technology transfer that developing countries may obtain from the liberalization of trade in services.
2. Constraints of developing countries’ own technological levels and capabilities. Liberalization of services trade can stimulate the service industries of developing countries to improve their competitiveness, reduce trade barriers, and help developing countries' services with their own comparative advantages enter the international market. However, international competition in the modern service industry is increasingly shifting from competition in labor costs and geographical environment advantages to competition in technology. The relative backwardness of science and technology is precisely the biggest obstacle in the real economy of developing countries, which is manifested in low technical level and management level, lack of necessary material production foundation, etc. Information technology services have benefited the most from liberalization. Due to the constraints of technological capabilities in developing countries, without effective measures, in a free trade environment, the competitiveness of developed countries may have an inhibitory effect on the development of service industries in developing countries. greater than the promotion effect.
3. Constraints on the internal industrial structure of the service industry in developing countries. The biggest weakness of the service industry structure in developing countries is the underdevelopment of producer services, so it is most necessary to introduce producer services from the international market.