Explain how trade liberalisation may affect the achievement of the goal of strong and sustainable economic growth in the short term and in the long term. 4 marks

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Trade liberalisation refers to the breaking down of barriers that impede the free flow of goods and services across international boundaries. It is evidenced by reductions in , such as lower and reduced support for many businesses and the signing of new free agreements with trading partners. The reduction in protection increases the level of imported and forces domestic producers to increase efficiency to remain competitive. This often involves large-scale restructuring that can create short term dislocation and , as businesses substitute out of labour and into for example. The closure of some businesses detracts from economic growth in the short term, making it more difficult to achieve the goal of strong and sustainable economic growth. However, over time, the restructuring helps to raise as businesses are able to produce more from any given level of inputs [e.g. new robotics lifting capital productivity], helping to reduce prices and improve international competitiveness of many Australian producers. This helps to reverse the negative short term effects and contributes to achievement of the goal in the long run.