• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The Benefits of Trade

Extracts from this document...

Introduction

1 A nation's industries, commerce, standard of living, and all other aspects of its economy are closely intertwined with the economies of foreign nations, through avenues such as goods, capital, technology and enterprise. Rising global prosperity further encourages nations to commit to harnessing relations with others in 'a world shrinking and becoming a single place.'(Marx) Not a new conception, the phenomena 'Globalisation', poses real opportunities and more surreal threats. Many contemporary authors in the field of science, politics and economics alike have resounded differing assumptions that support and contradict this newly formed sense of unity. Milton Friedman, an established economist, proclaims the ideology of a free market where 'no external force, no coercion, no violation of freedom is necessary to produce cooperation among individuals all of whom will benefit' (Friedman, p 2) In this essay, siding with the view of Friedman, I will define the key concepts of the free market and macroeconomic growth via 'the invisible hand', before critically evaluating one of its most sacred assumptions, the hypothesis that an 'invisible hand' will rid the threats of current existence and allow 'all parties to benefit.' (Friedman, p 7) Through evaluating the scope of the free market I will firstly assess the responsibility of government through intervention and secondly evaluate the efficiency on implementation of the free market. As the constraints of geography shrink and our territories become more eroded, ideologies need to be explored, to prevent further inequality and promote individual self-interest. ...read more.

Middle

Through an approach that is sustainable yet equitable, international cooperation could also generate boundless positive impacts. The aim of this essay endeavors to shed light on the benefits of free trade in relevance to the current 'protectionist' policies imposed through government regulations. In reference to current literature procured through inconceivable means, furthermore I will challenge current political thinking and asses the detrimental effect that regulations, namely subsidies, have toward developing countries' economic growth. The Benefits of Trade Through increased integration between nations, economies experience increased trade, capital and labor movements. Hill defines trade as: - 'A transaction involving the sale and purchase of a security; in general, the buying and selling of goods and services.' (p.166) People have traded with each other for centuries in order to overcome the local scarcity of resources. Scarcity, increased through consumption and an ever- growing populace, abets nations to seek globally as a means to feed their hunger. As this hunger grows, consumers awaken to the reality that goods can be produced more efficiently and cheaply elsewhere, and fosters choice and freedom. Recent developments have emphasized further positive gains from increased trade. These include; increased power and national influence; aid in promoting foreign policy and goals; cultural/social reasons and; economic development. Although numerous advantages arise as a result of more open trade between countries, governments see a need to protect industries in order to safeguard their reign of dominative power. As the trend leans more toward a more regulated and governed trade arena the envisaged future looks bleak for consumers as they are denied their sovereignty to choose. ...read more.

Conclusion

As discussed protectionist policies are detrimental to the overall economic success of a nation. Through such policies as subsidies, producers are less likely to better their products due to the absence of international competition. The implementation of freer trade promotes specialization of production and aids in consumers receiving better quality goods at a reduced price. In order for greater consumer choice and freedom protectionist policies should be re-evaluated. Reference List Blinder, A 1992, Free Trade, Liberty Fund Inc, Princeton, USA Bigelow, B & Peterson, B (ed.) 2002, Rethinking Globalization: Teaching For Justice In An Unjust World, Rethinking Schools Press, Wisconsin, USA. Dunning, H 1993, The Globalization of Business, Routledge, London Dunning, H 2000, Regions, Globalization and the Knowledge-Based Economy, Oxford, New York Economic Planning Advisory Council 1994, Regional Trading Agreements, Australia, August 1994, background paper no. 40, Canberra. Hill, Charles W.L. 2006, Global Business Today, Mcgraw-Hill Irwin, New York. International Monetary Fund 1988, Issues and Developments in International Trade Policy, December 1988, Occasional Paper no. 63, Washington. Lomborg, Bjorn (ed.) 2004, Global Crises, Global Solutions, Cambridge University Press, Australia Miller, V & Elwood J 1988, Free Trade or Protectionism: The Case Against Trade Restrictions, Isil. [http://www.free-market.net/resources/lit/free-trade-protectionism.html} Oxley, Alan, 2003, Protestors ignore the benefits of trade, in Justin Healey, The Globalisation Debate, Spinney Press, Sydney, pp. 20-21. Panagariya, Arvind 1999, Regionalism in Trade Policy, World Scientific Publishing, London Root, Franklin R 1993, International Trade and Investment, South Western Publishing Co, Ohio. Rothbard, M 1986, Protectionism and the Destruction of Prosperity, Mises Institute, USA. Stiglitz, Joseph 2002, Globalization And Its Discontents, Penguin, London. Sullivan, Jeremiah 2002, The Future of Corporate Globalization, Quorum Books, London. ?? ?? ?? ?? 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    ESSAY: Fair trade or free trade?

    5 star(s)

    This share was guarantee by the European Union. The MNC's have the power. The market is driven by the MNC and local producers are under their control. It is true that FDI is an investment in foreign country. When a firm invests abroad, and delocalizes the production, it creates employment on the one hand, but unemployment on the other hand.

  2. CRITICALLY EVALUATE THE THEORIES OF ABSOLUTE ADVANTAGE (ADAM SMITH MODEL) AND COMPARATIVE ADVANTAGE (DAVID ...

    Thus, we must construct an autarky equilibrium first. To determine the autarky production point requires some information about the consumer demand for the goods. Producers will produce whatever consumers demand at the prevailing prices such that supply of each good equals demand.

  1. Free essay

    Adam Smith "invisible hands"

    There are two types of effects regarding the alteration of commodity's price: Substitution effect and Income effect. Substitution effect is the quantity of additional commodity the consumers would buy after price changes to achieve the same level of utility; for instance, if the price of margarine rises, the consumer may substitute it with butter.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    What is needed, therefore, is a trade-off between the gains from globalisation, on the one hand, and domestic social stability (within developed countries), on the other. This leads Rodrik to advocate a "social safeguard clause" in the WTO, which would sanction restrictions on imports if they threatened prevailing domestic norms,

  1. David Ricardo theory of comparative advantage

    from trade: The terms of trade must lie between each country's pre-trade ratios for both countries to gain. If the terms of trade are below than pre-trade cost ratio, trade will not happened. However, it really matters exactly where the terms of trade lie.

  2. 'Critically assess the role of the World Trade Organisation (WTO) as a means of ...

    Least developed countries are defined according to an official United Nations list, while there is a degree of self-selection relating to developing countries.

  1. Explain the Heckscher- Ohlin model of international trade and assess the extent to which ...

    There are four main theorems in the Heckscher - Ohlin model, the first is the H-O theorem, and the second is the Stopler- Samuleson theorem, the Rybczymski theorem, and the factor price equalisation theorem. The Stopler- Samuleson and Rybcyznski theorems describe relationships between variables in the model while the Heckscher-

  2. Free essay

    does uk housing market warrant government intervention

    we must first look at the large increase in demand over the whole market. House Price Determination in the short run Equilibrium price is determined where demand equals supply. If demand changes (i.e. the demand curve shifts as in figure 6 where demand increases)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work