free trade versus protectionism
Post on 15-Apr-2017
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This debate never fails to be a furious one.
it is accepted by many acknowledged economics circlesdeveloped economies advantage from free trade.
Reducing trade barriers decreases costs and stimulates long-term productivity growth.
There are, however, some of the undeniable pitfalls of free trade.
Protectionists contend that free trade can incentivize foreign currency manipulation and mercantilism.
Trade negotiations of the Transatlantic Trade and Investment Partnership (TTIP) and The Trans-Pacific Partnership (TTP) trade deals have provided more fuel to the fire of this ongoing debate.
Free Trade Argument
classical pro-free trade argument cites the benefits of the increased competition and specialization that free trade brings.
more variety of goods
higher quality of goods
These factors increase productivity growth and living standards.
Trade barriers can cause conflict between countries and lead to fearsome trade wars that destroy the potential for mutual benefits from trade, and also spark the possibility of military conflict.
Protectionists argue that a free trade policy incentivizes the countries
So it trades with to practice mercantilism and manipulate their currencies in order to maintain this positive balance of trade.
Perhaps, China is doing this very thing.
I incline more toward the free trade view, however I do feel that the danger of different nations manipulating currencies and accumulating large foreign monetary reserves should not be ignored.
BYM V S SAI HEMANTBBA FOREIGN TRADE UPES ,DEHRADUNUTTARAKHAND, INDIA