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Arguments For And Against Free Trade

Arguments For And Against Free Trade

Under this title, I have just tried to provide the general picture about the Arguments For And Against Free Trade. In next writings, I will try to provide details of each arguments specifically.

As we know, the most of the countries head towards free trade. Therefore, regional free trade agreement became important topic for countries. In this sense, arguments for and against regional free trade agreement have occurred.

Arguments For Free Trade

If we start with the arguments for regional free trade agreements, the first one is the concept of absolute advantage which emphasize that countries can get benefit from trade if specialization on goods that they produce better than its competitors is achieved, and they trade with each other. The other one is the theory of comparative advantage. It emphasizes that countries should achieve specialization on production of goods and services that they are relatively efficient compared to its rivals. Thus, the country can be better off. The next one is Heckscher-Ohlin theory. It states that comparative advantage can be obtained by the factor endowments of the country. After determination of comparative advantage, countries can get benefit from trade. Also, we have liberal trade theory which underlines the benefits of free trade. The last one is free trade theory which looks benefits of trade for a nation in terms of two aspects which are; gains from specialization, and contribution to economic growth.

Arguments Against Free Trade

When we come to the arguments against regional free trade agreements, the first argument is “Infant industry” which requires protection for new domestic industry until they become competitive. The other argument is national security which emphasizes the importance of self-sufficiency for strategic industries. The next argument states that we should have protectionism to protect national culture from globalization.

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Categorised in: Economics, Economy

This post was written by Emre Bilgiç

Ankara Yıldırım Beyazıt University

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