1 Answer | Add Yours
According to orthodox economic thinking, free trade is a good thing for all countries concerned, at least in the long run. Economists will admit, though, that trade can be bad in the short term for some people and groups of people.
In the long run, economists say, trade will be good for all countries involved. Countries will focus on making only the things for which they have a comparative advantage. They will then trade with other countries to get things for which they do not have a comparative advantage. When this happens, all countries will be producing the things that they are most efficient at producing. This will mean that more goods are produced in the world as a whole. Therefore, the overall standard of living for the world will rise.
However, economists do realize that this process will harm some people and some sectors of economies in the short run. We can see this going on in the United States today. People without college degrees are being harmed by trade. This is because manufacturing jobs that once provided them with good wages have gone overseas. If trade did not exist, those people would still have well-paid manufacturing jobs.
Thus, while trade helps the world as a whole in the long term, it can be harmful in the short term, particularly to individual people and to groups of people involved in certain specific sectors of the economies of various countries.
We’ve answered 333,831 questions. We can answer yours, too.Ask a question