StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Free Trade as the Primary Force Driving Economic Development - Essay Example

Comments (0) Cite this document
Summary
The author of the following essay "Free Trade as the Primary Force Driving Economic Development" primarily brings out that free trade and its subsequent effects on the economy have been the hotbed of debate for economists in the recent years. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.4% of users find it useful
Free Trade as the Primary Force Driving Economic Development
Read Text Preview

Extract of sample "Free Trade as the Primary Force Driving Economic Development"

Download file to see previous pages The theoretical literature available assumes certain conditions such as perfect employment which is not seen commonly in the real world. As a result, many of the theoretical assumptions come into conflict with empirical evidence. The theory may suggest that the reduction of barriers to trade can promote the welfare and economic progress, but evidence proves it otherwise. This paper presents the argument on the effects of free trade on the global economy and progress. The paper discusses the topic with supporting evidence from theories and empirical evidence. The tentative line of argumentation From a theoretical point of view: The characteristic rationale for the free trade originated in the 19th century when David Ricardo proposed the theory of comparative advantage. The theory of comparative advantage assumes that when a country exploits its factors of endowments and specializes in the production of certain goods, it can gain benefits from trading these goods. After Ricardo, a number of theorists built upon the theory and hence the Pure Theory of Trade came into limelight. Comparative advantage promoted that when countries are able to specialize, they can acquire a lower opportunity cost in the production of goods. The late 19th century saw the British increasing trade across the borders during the Great Famine in Ireland. It was then that the effects of free trade manifested itself with increasing income disparity. The uneven and disproportionate income distribution caused one million Irish to die of hunger and disease. Even Adam Smith, who is considered to be the father of free-market economics, contended that trade restrictions are incumbent in certain sectors like defense and navigation. The theory of comparative advantage does not provide the welfare benefits that it promises, particularly to developing countries. The theory necessitates perfect employment and if it is not present, as is the case usually, the country is worse off from trade liberalization due to a large number of workers who are displaced (Costantini 1999). From an empirical point of view: One way of analyzing the effects of free trade on progress and economic development is through the North American Free Trade Agreement. The Agreement created a watershed in the global trade policy, primarily because of the widespread level of free trade that it created (Kose, Meredith, Towe & International Monetary Fund 2004). The postulations of the Agreement have been a contentious subject. The proponents of NAFTA contend that it has caused the Canada, Mexico and the US to increase employment, whereas the opponents argued that it would cause a loss of jobs in the US with workers moving towards Canada and Mexico. In one of the popular negotiation rounds of the Agreement, the Presidential Candidate H Ross Perot claimed that the reduction of trade barriers would cause the colossal sucking of jobs in the US to Mexico. Over the past 15 years, economists have developed contradicting opinions regarding the profitability of NAFTA to the signatories. Many economists contend that NAFTA has had a meager influence on the US economy (Brezina 2011). However, the opponents of NAFTA argue that the economy of the country is at the receiving end of the trade policies; this relationship has not proved to be beneficial. The NAFTA has created a disproportionate economic balance, with the investors gaining more from the Agreement as compared to advantages the workers and environment derived. ...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Free Trade as the Primary Force Driving Economic Development Essay”, n.d.)
Free Trade as the Primary Force Driving Economic Development Essay. Retrieved from https://studentshare.org/macro-microeconomics/1408077-essay-plan-subject-international-business
(Free Trade As the Primary Force Driving Economic Development Essay)
Free Trade As the Primary Force Driving Economic Development Essay. https://studentshare.org/macro-microeconomics/1408077-essay-plan-subject-international-business.
“Free Trade As the Primary Force Driving Economic Development Essay”, n.d. https://studentshare.org/macro-microeconomics/1408077-essay-plan-subject-international-business.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Free Trade as the Primary Force Driving Economic Development

Leadership Development Experience

The nine-month certificate program which I completed at Leadership Institute of South Puget Sound combined academic study on leadership with practical development of leadership skills. Numerous community service activities such as involvement in Employee Community Fund (ECF), being a Child haven volunteer, Christian Center volunteer and a Junior Achievement Consultant have exposed me to situations which made me apply many skills such counseling young people, and motivating them to achieve their full potential, seeking solutions with expansive thinking and application of flexibility and quick responsiveness. My involvement in Christian Center had specially sharpened my crisis management skills by participating in natural disaster m...
13 Pages (3250 words) Assignment

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages (1500 words) Case Study

Air Pollution and Cardiovascular Disease: Bullish Business Long-Run Trade-Off

Increased concentrations of effluents in the air were found to have particularly been emitted from motor vehicle exhausts, industrial factories, and other burning or combustion activities of Australians (Bartnett et al. 2006). Practically, any engine that utilized fossil fuel is known to be emitters of these effluents in addition to other activities that require burning of materials as have been broadly argued by different concerned sectors for the minimization of its usage, as well, finding alternatives which could be biodegradable fuels.

Air is humankind’s natural source of respiratory Oxygen. Its preservation may have been openly disregarded so that the current generation has to face up to the maintenance of it...
12 Pages (3000 words) Term Paper

The Trade Union Movement in the UK

Before the ERA 1999, union membership and recognition in the UK were characterized by voluntarism, in which employers and employees could bargain over the terms and conditions of employment without any legal interference. With the statutory system ushered in by the new law, voluntary recognition of unions is no longer allowed and it becomes unlawful for British employers to deny recognition to unions under any circumstances. That conveys the impression that ERA created a radical change in British industrial relations. This paper takes the contrary view, however, and proposes that while the new industrial relations law looks revolutionary in principle, there are no fundamental changes in actuality for the change to qualify as &ldqu...
8 Pages (2000 words) Case Study

Economic Value Added as Tool for Improving Performances

To discover whether pure profits exist, take the revenue of the firm and deduct the costs of all factors of production other than capital. Then deduct the pure return on capital and any risk premium necessary to compensate the owners of capital for risks associated with its use. Anything that remains is pure profits.” Simply in economic terminology economic value added (EVA) is commercial profits reduced by opportunity costs (that is the pure return on riskless investment and the risk premium). Lipsey calls the EVA defined in this fashion as “pure profits, economic profits or, where there is no room for ambiguity, just profits”.

Investors in any company are interested in real profits that are profits r...
7 Pages (1750 words) Report

Gross Domestic Product and the Nations Competency in Terms of Economic Welfare

It is often used to compare the economic performance to aid as a prediction tool and to analyze the business cycles and the recessive and expansive economic performances within them. This further aid economic and fiscal policy formulation of the government and is also used to analyze the consumer behavior and the economic phenomena involved. (Heakal, R. 2008).These figures can be a benchmark to compare economies of different nations and the economic prediction process is also made possible.

A usual pattern of assessing the Gross Domestic Product is to have an initial GDP report on every quarter which is an advance report. Two corrective reports follow this before the final figures on GDP are arrived at. It usually takes...
7 Pages (1750 words) Report

The Role of Mass Media in the Development of Aggression

Despite the fact that longitudinal studies have proven that human aggression is to some extent an unwavering trait, it is undeniable that the environment plays a big role in influence the aforementioned behavior (Slaby & Roedell, 1982). Our daily encounter with the environment is a form of socialization that is defined as the process of integrating within oneself a sense of connection to a larger social world by means of discovering, understanding and adopting the beliefs, values, and norms of culture of other people. To a certain extent, sociologists consider the mass media as a powerful socializing agent as its significance is not constrained to the content alone of the media messages. Instead, it affects how we learn a...
10 Pages (2500 words) Report

The Constructivist Approach to Teaching Science in the Primary Classroom

When students learn science, they construct meanings and develop understandings in a social context, state Duit & Treagust (1998: 4). Classroom verbal discourse in the form of teacher talk and teacher-student interactions form the basis for most of this meaning-making. Because teacher questions are a frequent component of classroom talk, they play an important role in determining the nature of discourse during science instruction. The cognitive processes that students engage in, as they undertake the process of constructing scientific knowledge, to a large extent depend on the kinds of questions that teachers ask and their way of asking the questions.

Chin (2007: 816) conducted a study to investigate questioning-bas...
7 Pages (1750 words) Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages (2500 words) Research Paper

Macroeconomics and Trade Policys

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages (1750 words) Article
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Free Trade as the Primary Force Driving Economic Development for FREE!

Contact Us