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Discussion 2: Free Trade as the Best Policy

Free trade is an economic policy that allow nations to trade goods without restrictions such as tariff and non-tariff barriers to trade. The policy enables countries to have greater choice of goods and achieve greater benefits from economies of scale as well as increased exports and lower prices for consumers. Many economists support free trade due to such benefits, and they cite that this trade allows countries to specialize and ensure the production of cheaper products; thus, making countries better off. Essentially, economists, the major proponents of free trade, cite that products are less expensive under free trade, particularly through the comparative advantage.

The theory of comparative advantage states that free trade allows a country to produce a particular good or service at lower opportunity costs than its trading partners, meaning that free trade can still work even if one trading partner holds an absolute advantage in all production areas (Dean et al.). Comparative advantage also affirms that free trade allows countries to increase their economic welfare by specializing in goods where countries have a lower opportunity cost. It, therefore, means that under the law of comparative advantage, countries can specialize in goods with lower opportunity costs where they have a comparative advantage. In addition, by specializing in goods where they have a comparative advantage, free trade enables such countries to achieve economies of scale (Brondino 8). So, one key benefit of free trade through the theory of comparative advantage is that it results in less expensive products, making all countries better off as their money attain higher purchasing power, making inflation-adjusted incomes higher (Brondino 17).

Therefore, free trade can benefit countries by making products cheaper through the comparative advantage. The theory of comparative advantage asserts that there is an improvement in total economic welfare in all countries if they specialize in products with lower opportunity costs.

Works Cited

Brondino, Gabriel. “Fragmentation of Production, Comparative Advantage, and the Heckscher-Ohlin Theory.” Review of Political Economy (2021): 1-20.

Dean, Erik, et al. “Absolute and comparative advantage.” Principles of Economics: Scarcity and Social Provisioning (2nd Ed.) (2020).