Geography: Pros and Cons of Free Trade
Few can contend that the world is more interconnected and interrelated more than ever. This web of interdependency is primarily made possible by trade, and in the twenty-first century, a large and significant portion of trade is conducted on a global scale. Furthermore, while the majority of people agree that free trade can benefit both parties in terms of economic development and an increase in overall production, many critics have voiced their fears of the negative consequences that may result from a global trade environment with few barriers or limits. Proponents of free trade argue that benefits far outweigh costs and that the primary gain is efficiency of production achieved through comparative advantage and specialization. Others also claim that free trade promotes democracy, and any measures that work towards creating trade barriers results in expenses that will ultimately be passed on to consumers. Increased competition that eventually fuels innovation is another notable benefit to free trade. Therefore, ideally, all these different factors work together in producing economic growth and an improved quality of life for citizens of both nations.
While it's quite obvious that free trade has various positive aspects, a growing number of skeptics have voiced their concerns in the rising debate over the negative consequences and costs of an open market with few restrictions or limitations. Perhaps the most well known argument against free trade is the threat it poses to domestic jobs and infant industries. Other concerns that are of increasing importance in today's world are environmental and labor standards that may be adversely affected by laissez faire policies. Furthermore, some individual nation states or those with political power feel that their economic and political sovereignty are threatened by global organizations that regulate worldwide trade. These critics question the statement that all parties are better off with free trade and disagrees that the costs and benefits are equally distributed among wealthy developed nations and industrializing countries.
Perhaps one of the most important benefits from free trade is the ability for nations to specialize in producing the items they are most efficient at producing. Different countries have unequal distributions of natural resources, different environments, levels of education, size of workforce, amount of capital, and so on. Therefore, the bottom line is that different countries are better suited for producing different things. A country will then produce what it is most efficient at producing relative to other countries and trade for products it is less proficient at manufacturing. As a result, overall production or output will increase, and a country's economy as well as it's people may benefit from a greater variety of goods at cheaper prices. Therefore, when opportunity costs are compared, the countries should focus their attention on...