International Trade the Basis of Essay

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Knowing that international trade is by definition a national-level issue does not stop people from pointing out its flaws. Protectionism arises from individual or national interest, or to protect infant industries. Each of these must be recognized, however, as a distortion in the trade system, a negative action undertaken to achieve a non-economic goal (Friedman & Friedman, 1997).

In the case of many countries, the benefits of international trade are negligible not because the money does not come into the country, but because the money is siphoned out of the economy before it can do any good. Corruption and other inefficiencies in a market can negate some of the benefits of international trade, before the citizens of the country see the benefit. In order that citizens see benefit, they must have low taxation rates, receive public goods from their governments, or receive jobs from their companies. In short, trade will put money into an economy, but it cannot dictate how that money is put to use.

Governments less oriented towards trade will tend to protect more industries and attempt to product more goods for domestic consumption.

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This approach perpetuates inefficiency. Some nations seem unsure about what they can produce, because they are fixated on their absolute disadvantages, rather than their comparative advantages. But by balking at trade, they are reducing the total economic output of the world, and by not putting into the system they are ensuring that they will get nothing out of it either.

Removing trade barriers promotes both efficient production and freer trade. Efficient production is essential to economic development. Trade necessitates efficiency as a consequence of competition. A nation therefore is compelled to do more with its factor endowments than it has in the past. Indeed, the more efficient its use of its endowments the more it can sell; the more it sells the more endowments it has. Without trade, there is little incentive for efficiency, and as a result there is little growth (Heakal, 2009). Nations that open up to trade are forced to become efficient, to maintain comparative advantages, and therefore are able to accumulate capital through trade and thus grow.

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