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Free trade and protectionism


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Thu Aug 20 2009
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Free trade and protectionism

... Free trade and Protectionism Nowadays, globalisation has made the world such a smaller place. International trade between countries becomes more and more frequent. Therefore governments would likely to decide an act of opening up economies which is known as "free trade". Free trade allows traders to transact without interference from government. Thus, goods and services from everywhere can compete with domestic products and services. It works by bringing down trade barriers such as tariffs. Under this policy, the prices are the sole determinant of resource allocation, and they are a reflection of true supply and demand. However, in order to protect domestic industries and reduce the trade deficits, some governments make policy to keep out foreign goods, which is called "protectionism". Contrast with free trade, protectionism is a policy where the allocation of goods and services between the trading countries are determined by artificial prices that adjusted by governments and do not reflect

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User Reviews of this Essay

What our users think of this essay:

"First of all, there's no real question here. I'll assume that this is simply a discussion of Free Trade and Protectionism. First things first - replace 'Nowadays' with something more formal. This is a professional piece of work, and that word is a little too chummy. Secondly, I don't like the use of bullet points. Although it makes it clear what you're saying, it's not the best thing to put into an essay. Removing them would be an improvement, I feel. Then we get onto your actual economics. In general, it's fine. Standard arguments, nothing special, fine. That said, with your tariff diagram I would like to see you mention that the reason the price of world goods is perfectly elastic is because the country is a very small buyer - i.e, it cannot influence the world price of the good. I would also like you to mention the Deadweight Welfare Loss triangles from the diagram in your arguments against protectionism. Finally, I'm not convinced about your last point for protectionism - that it prevents 'overspecialisation'. The main problem with this, is that it's based on an oversimplified model of international trade. Secondly, it's simply not a convincing argument - the economic consequences of a tariff or a subsidy would probably be greater than any gain made from keeping a relatively inefficient industry in business. I feel you could cut that out and enter more reasons for free trade (which are thin on the ground in this article). TSR User : chidona"
TSR

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