December 18, 2012
One of the largest options for increasing trade efficiency would be the option of free trade among WTO, which writes on http://www.wto.org “the data show a definite statistical link between free trade and economic growth. Economic theory points to strong reasons for the link. All countries, including the poorest, have assets — human, industrial, natural, financial, which they can employ to produce goods and services for their domestic markets or to compete overseas. Economics tells us that we can benefit when these goods and services are traded. Simply put, the principle of “comparative advantage” says that countries prosper first by taking advantage of their assets in order to concentrate on what they can produce best, and then by trading these products for products that other countries produce best”. Basically what they are saying is that a pro of free trade would be that counties would each be able to specialize in what they are best at producing and would also have to compete a lot more and would probably make certain goods better. The problem would be “too much dependency on a few products”: Specialization through comparative advantage could make an economy (especially a smaller economy) too dependent on a few resources or products. If demand falls in those areas, economic catastrophe could ensue If the United States agreed to free trade there is no question that it would reserve a lot more money and would boost the economy. Well then why don’t we do it, it sounds great more money, that’s what we need in a bad economy right. There has to be some reason for why the US has not tried to go for free trade. One reason is probably that someone asked “is it fair”. Trade contributes to global efficiency. When a country opens up to trade, capital and labor shift toward industries in which they are used more efficiently. That movement provides society a higher level of economic welfare. However, trade also...
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