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International economics Essay Topics & Paper Examples

Reasons for Free Trade

Free trade can be defined as the situation whereby governments impose no artificial barriers to trade that restrict the free exchange of goods and services between countries with the aim of protecting domestic producers from foreign competitors. The argument for free trade is based on the economic concept of comparative advantage. Comparative advantage is the economic principle that nations should specialize in the areas of production in which they have the lowest opportunity cost and trade with other nations, so as to maximize both nations’ standards of living. FREE TRADE |Advantages |Disadvantages | |Free trade allows countries to obtain goods and services that the |An increase in short term unemployment may occur as some domestic | |cannot produce themselves, or…