Political International Economy: Free Trade or Isolationism Avoiding Trade Wars - Essay Example

In other words, when every single nation of the globe is permitted to conduct free trade, the general financial condition of the world is expected to prosper. In the broader sense, trade (free trade in this case) can raise the income level and provide organizations and customers to have more choices to purchase products/services from their revenue. Unfortunately, there is also the occurrence of inequality with respect to deficits and surpluses in the monetary worth of products and services that are merchandized.

Owing to these factors, considerable segment of concerned scholars, view the notion of free trade as a game with apparent winners and losers. Free trade also uncovers manufacturers and generates trade wars (Epping 43). Thesis Statement The paper will intend to describe the impact of free trade along with its relation to politics. The objective of the paper is to analyze the aspects of free trade and also to describe the methods through which the trade wars can be avoided in today’s 21st century.

Discussion Trade Wars Free trade creates international competition among organizations which often results in layoffs and indolent plants. It creates difficulties for national capital cities which rely on industries of neighbor countries for occupation and tax income. However, nothing in the international economy remains identical in the long run. As a result of international competition, numerous local industries are stressed to consider the extreme measures in order to become more productive, thus permitting them to contend and flourish at local as well as in the global periphery.

Free trade facilitates organizations to access the entire international market and thus they enjoy higher economies of scale in order to manufacture vast quantity of products at lower cost and positively impart cost advantages to customers equally in the cross border nations. Free trade generates tremendous economic consciousness for nations to alleviate their restrictions for trading purposes (Epping 43). Although trade wars generate prosperity for global economy, it also leads to losses at times.

It can result in imposition of protecting local trade and trade barriers. Tariffs, quotas, and nontariff barriers are commonly used by governments. Tariff is considered as a kind of tax rate that is imposed on products for accessing certain state. On the other hand, quota restricts the level of foreign products which can be imported from a certain nation. Both have immense power to raise the expenses of manufacturing. Government also provides subsidy to the local manufacturers in order to make the cost of products artificially less compared to the cost of corresponding imported products.

The trade policy often regulates affluence for economic groups and also gives rise to recurrent domestic political conflict (Spero and Hart 72). International Trade and Politics Stolper-Samulson has depicted that free trade provides advantages in relation to the locally abundant elements of manufacturing such as land, workforce, and wealth and also harms the locally scarce aspects of manufacturing. Higher free trade can increase the political strength of locally profuse facets of manufacturing, whereas declining free trade can damage these aspects (Frieden, Lake and Broz 318).

Through protecting few productive or unproductive