[Evaluate the arguments for and against free trade and protection]
Free Trade is the ability of nations to trade products openly & safety for increased efficiency, to utilize specialization and for absolute & comparative advantages. Protection involves governmental influences hindering the competition from foreign trade on local firms. Free trade and protection have complete opposite effects on the economy, and many aspects influence the industries in favoring the opposed actions for the benefits that firm gains.
The advantages of free trade often outweigh the disadvantages for strong, wealthy economies as their buying & selling power abuses smaller economies. This has been overcome by the introduction of multilateral agreement between nations after WWII, giving smaller economies the ability to come together & increase their negotiation power. Therefore the advantages of free trade can vary from nation to nation. Due to the increase of output in the economy there is a resulting increase of income and therefore consumption, this will also stimulate individuals to save and later invest in property or other assets. Ultimately there is an increase in the standard of living. Another advantage to free trade is the accessibility to goods previously unobtainable from lone nations- this is extremely efficient and encourages specialization of products. Free trade allows all resources to be used effectively & efficiently through nations using comparative & absolute advantages.
Through on the other hand, disadvantages of free trade also occur. As previously mentioned, smaller developing nations rich in scarce resources are often manipulated by the larger, wealthier nations. Free trade in this case causes the abuse of bargaining power in trade agreements. Barriers occur to free trade as well, nationalism is a major factor that disadvantages the principles of free trade. National Pride after WWII has resultantly caused nations to be reluctant to trade as due to the...
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