The purpose of this paper is to establish the benefits of free trade, to examine the reasons and outcomes of protectionist policies, and to evaluate the rationale behind trade protectionism.
The methodology used in this paper includes review of the literature and empirical studies published from 1967 to 2008, and descriptive statistical analysis of data published by international organizations.
International trade has been growing faster than growth of world gross domestic product, and countries with freer trade policies benefit more than countries with restricted policies. Yet, trade protectionism continues to be exercised in response to pressure from select industries and political constituencies. The paper also establishes that trade restrictions are harmful to the economies of the trading partners.
This paper establishes the benefits of free trade, the harms of trade restrictions, and challenges the popular rationale for protectionism.
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