tes. This is one of the achievements that have contributed greatly to shifting of countries from undeveloped cycles to becoming developed. For example, foreign direct investment has contributed to development of China. China is among the developing countries that’ has the largest reserve of foreign direct investments’ (Chen, & Emile, 2013 p. 120). China has attracted many foreign investors due to reduced market barriers such as ‘uniform tax for both domestic and foreign investors’ and trade liberalization resulting to increase in its gross domestic product (Davies, 2013 p. 11). As a result, China’s economy has continuously grown making it among the most developed countries. This has shown how trade liberation impacted on the development of countries through trade agreement that encourages foreign direct investment.

Free trade allows free movement of labour and capital across countries and regions. Free movements of labour and capital ensure that countries under the trade treaties are able to acquire the necessary factors of production for their businesses that will help them to improve their productivity and output. In late 1950, some of the countries in Europe suffered shortage of labour while other experienced high levels of unemployment. For example, Italy experienced economic problems such as high levels of unemployment while other countries such as Germany were lacking different types of labour and shortage on experts (Zaiceva, & Zimmermann, 2008 p. 429). Presence of free trade that was steered by European Economic Community ensured that Germany could be able to get labour from Italy at no cost. As a result Germany was able to get experts that it lacked while Italy benefitted from reducing the level of unemployment. Free trade helps to settle unemployment problems in developing countries as it allow free movement of people from their countries to more developed ones where they are able to get employments. This in turn helps them to reduce unemployment rates and realise their economic goals from increased income from abroad. Consequently, the income of people increases resulting in improved standards of living for the