Essays on Who Wins and Who Loses from a Country Opening Up to Free Trade Literature review

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The paper “ Who Wins and Who Loses from a Country Opening Up to Free Trade” is a thrilling example of the literature review on macro & microeconomics. Economists have strongly advocated free trade for many years. In the mid-eighteenth century, much mercantilist thought that free trade was both a national, and everyone’ s interest. However, during the19th and 20th centuries, this food of thought was again revised and found that free trade was not every nation's or person’ s interest. Such arguments under this umbrella did include the strategic trade, income redistribution, terms of trade, and infant industry arguments.

These arguments were thought to weaken the free trade idea. However, examinations of each one of the arguments rather than weakening free trade counterarguments that favor the position of free trade were developed. Dixit & Norman (1980) among the counterarguments include the democratic system allowing lobbying, imperfect or incomplete information, the second-best theory, and retaliation potential. Today there exist sophisticated modern arguments. This argument puts forth that, free trade is everyone’ s best interest. The modern argument does not classify the arguments of exception as illogical or invalid.

However, it argues that the exception calls for government intervention in terms of trade policy, in addition, puts a challenge to implementation problems that are likely to cause impracticality to the policy Torrens (1844). The economic theory, however, is not without criticism regarding free trade regardless of modern argument. Such kind of disapproval supports that free trade is not a simple measure as some theories say, and that is why not everyone benefits from free trade. Therefore, according to real-world experience and trade theory, there are losers and winners. The modern argument is actually based on the realistic assumption that leads to a realistic conclusion.

This is because it is built on outcomes analyzed from different trade models. The considerations of all trade models actually offer realistic features of the globe at large. Jointly, the trade theory model, put into consideration realistic features, joint production, imperfect information, consumption, externalities in production, effects of trade dynamism, and imperfectly competitive markets.


Bourguignon F. & Morrisson C. (1991) External trade and income distribution, paris; OECD

Dixit A. & Norman V. (1980) Theory of International Trade: A dual general equilibrium approach. Cambridge: Cambridge university press

Falvery R.E. & Kierzkowski H. (1987) product quality, intra-industry trade and (im)perfect competition, in Kierzkowski H., ed, protection and competition in international trade New York: Basil Blackwell 143-161

Graham F. (1923) Some Aspects of Protection Further Considered, the quarterly journal of economics 37 (2)199-227

Harry G.J. (1953) Optimum Tariffs and Retaliation, review of economic studies 21(2) 142-153

Krueger A. (1978) Liberalization Attempts and Consequences Cambridge: Ballinger

Krugman P.R. (1979) Increasing returns, monopolistic competition and international trade, journal of international economics 9:4, 469-479

Krugman P. (1987) “is free trade passé?” journal of economic perspectives 1(2):131-144

Torrens R. (1844).The budget: on commercial and colonial policy. London: smith

Young A. (1991) Learning by doing and the dynamic effects of international trade, quarterly journal of economics 106:2,369-405

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