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Free Trade during Colonialism vs. Free Trade during Globalization - Essay Example

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Free trade during colonialism vs. free trade during globalization Introduction Many people have the illusion that free trade is an entirely modern economic concept which is the brain child of globalization. In reality, free trade existed in numerous forms even during colonialism…
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Free Trade during Colonialism vs. Free Trade during Globalization
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Download file to see previous pages This paper analyses the major similarities and differences between free trade during colonialism and free trade during globalization. Free trade: Colonialism vs. globalization An unexpected transformation occurred in the aftermath of the economic downturn or depression which began in 1873 in Europe and North America. With barriers to trade rising, production standing still, and new competitors such as Germany and the United States industrializing, the search for new markets and sources of raw materials intensified in the direction of colonial expansion (Saul, n.d.). Colonial powers tried to safeguard their business interests during nineteenth and twentieth centuries rather than thinking too much about the rights of the nations under their control. The concept of free trade was another mechanism for them to exploit the resources of nations under their control. The current free trade which is the concept of globalization promotes neo-colonialism which is sharp in contrast with the principles of free trade implemented by the colonial powers in the past. It should be noted that neo-colonialism is a practice of promoting capitalism, globalization and cultural co-operation between countries. In other words, current free trade has the ability to contribute heavily to the vast sectors of global population whereas the free trade during colonialism was confined within the boundaries of the nations under colonial rule. Current free trade helped “the globalization of a free market economy, the standardization and homogenization of production and the fixing of world prices in economies which are at unequal stages of economic and technological development” (In Opposition to Free Market Globalization and Neo Colonialism, We Say: No to APEC, 2004) Former Nobel Prize winner and renowned American economist Paul Krugman argued that free trade developed as a result of globalization has brought many opportunities to this world. In his opinion, “the view that free trade is the best of all possible policies is part of the general case for laissez-faire in a market economy and rests on the proposition that markets are efficient (Krugman, 1987, p.134). On the other hand, trade scenarios during colonialism were entirely different from the current trade scenario. Current market is extremely efficient and heavily competitive compared to the market in the nineteenth and twentieth centuries. Instead of conflict, co-operation seems to be the principle undertaken by the free trade of modern era. In other words, free trade of globalization is perceived as helpful to all countries irrespective of their socioeconomic conditions. On the other hand, free trade during colonialism suited only to the interests of the colonial powers. Theory of comparative advantage was promoted by free trade of globalization era whereas free trade policies during colonialism were revolved around the interests of the colonial powers. The theory of comparative advantage promotes the view that good of natural environment and industrial abilities of each country should be exported. It also cites that free market is another ideologically based intervention in ways that maintain the economic and political status quo (Gonzalez, 2006, p.65). Free trade evolved out of globalization, helps countries to sell their products in global markets where the ...Download file to see next pagesRead More
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