The paper "Free Trade Policy Has not Served Intended Economic Growth Aims" is a perfect example of macro and microeconomics coursework. Although free trade has largely been lauded in the developed economies as the primary anchor of international economic dynamics, it has not served developing countries especially regions in which industrialization is at infancy. Despite tremendous gains of globalization that have enforced the significance of free trade in economic growth, the concept appears to have been impartial and therefore unfavorable in economic growth context for which it was created in the first place.
The inadequacy of free trade in leveraging rapid economic growth is reflected by the systematic refusal of adoption by some countries including some that had adopted it during the immediate post World War II period. This critical piece will detail and analyze the concept of free trade and its implications on economic growth, whilst explaining the positive aspects of protectionism. Free Trade Policy has not Served Intended Economic Growth Aims The primary dissent leveled against free trade is that in the international policy realm, the concept appears to have been unrealistic.
The primary source of free trade problems is its fundamental assumption of a laissez-faire scenario in which government trade machinery play a non-intervening role. Additionally, the underlying policy situation that requires free trade to prevail under a perfect competition context is not only factually impractical but also makes the concept unable to deliver growth goals (Francois et al. , 1993). The precedence set by the non-cooperation of countries in the adoption of free trade policy exacerbated full realization of the expansive economic development goals as enshrined. It is imperative that free trade only works in market contexts where governments give full and impartial cooperation and follow stipulated policy provisions.
The imposition of trade barriers by larger economies against the smaller counterparts derails the ability of free trade to generate any economic growth recipes. When an economy becomes over-dependent on other countries for economic elements such as important production materials, food, and investments then its development track is compromised. This is to imply that by pushing overdependence on foreign governments for critical economic goods, free trade compromises a country’ s growth potential. Free trade can drive an imbalanced economic development in a country.
According to Cole (2000), free trade and the international economic specialization that characterizes it distort the country’ s development balance. This is to imply that the concept catalyzes imbalanced development of the already developed industries in which the country has a comparative advantage while other areas remain underdeveloped. By converting some countries or regions into dumping sites and making facilitating some countries to transfer harmful products into trade partner’ s economies free trade derails the disadvantaged economies’ growth potential. In this context, cutthroat competition and concomitant dumping effects occasioned by free trade make it unhealthy for the suffering economies.
The impact of free trade has been empirically experienced in developing economies into which industrialized countries float their below standard priced goods with an objective of taking over the markets (Cole, 2000). Cheaper goods deprive domestic industries the essential growth potential that is usually cultivated by sustainable profit margins. Additionally, free trade has increased the dumping effect that not only distorts prices locally but also reduces the potential of export payments that determines growth in an economy.
Free trade increases the potential of harmful goods being produced and traded within a country, which contravenes an economy’ s regulatory role over the nature and quality of imports from abroad.
Cole, M.A. (2000). Trade liberalization: Economic growth and environment. London, UK: Edward Elgar Publishing.
Francois, J.F., Shiells, C.R., & United States International Trade Commission. (1993). The dynamic effects of trade liberalization: A survey. New York, NY: United States International Trade Commission.
Frieden, J.A.,& Lake, D.A. (2000). International political economy: Perspectives on global power and wealth. London, UK: Routledge.