Free trade enables countries to specialise in producing goods and services where they have a comparative advantage. Comparative advantage is the ability to produce a good at a lower opportunity cost than another producer (Mankiw & Gregory, 2012). This provides a net gain in economic welfare for the producing country. There are many advantages to this aspect of free trade such as lower production costs. For example, inflicting stringent rules on the production of goods can ...
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...iency within an economy. However, many obstacles can also be incurred such as: potential structural unemployment and negative impacts to the natural environment. Protectionism of countries industries through the use of tariffs, quotas, the use of the infant industry argument etc. are also met with caution.
I believe it is more detrimental to an economy that focuses entirely on free trade, the benefits weigh heavily; however, to what end? There are too many assumptions, that is free trade ‘has’ the potential to spark competitiveness within industries, but also invoke trade creation and increase economies of scale. Protectionism, at least, for a select time, is more focussed on the growth within an economy; nurturing industries until an appropriate period of time as allowed them to gain experience and knowledge, made useful in regards to eventual international trade.
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