POLS1006 Lecture Notes - Lecture 11: International Political Economy, Currency Intervention, Free Trade
18 Jul 2018
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Ability to buy and sell products and services without regard to national origin. Ina perfectly free trading world, only transportation costs would prevent people buying goods from wherever they could get the best deal. Almost all academic economists support free trade in principle. Whatever a nation is best/least worst at producing. Australia, for instance, has a comparative advantage in mineral extraction, china in low skill manufacturing, uk in financial services, germany in high skill manufacturing. The beauty of free trade is that it allows nations to specialize and get the most value from doing what they do best. Free trade is almost universally reckoned to be beneficial by academic economists. Allows nations to be wealthier by concentrating on their comparative advantage. But in practice trade is restricted by tariffs, quotas, non-tariff barriers to trade and currency manipulation/ instability.
