After the English Economist David Ricardo proposed the theory of comparative advantages, economists were confident of the superiority of free trade that they called it a 'law'. However, for the last twenty years, free trade has been questioned.
This questioning trend has its roots in the nineteenth century. The first half of the nineteenth century saw Friedrich List (1789-1846), a German economist arguing for a "protectionism educator".
He felt that the inexperienced nations should be able to enter into a business even if it meant that they would be less effective than those who are already established. This does not come as a surprise and wasn't a mere coincidence. Germany at that time was far behind England and was opposed to the idea of Free Trade and Ricardo.
[...] The emergence of China in the global economic game, its desire to become the "world's workshop" by manipulating the exchange rate of its currency, playing on all tables instead of specializing in the production of a few products, has prompted some economists to develop tests less favorable to free trade. The theory of free trade is based on the idea that the gains associated with it are somehow redistributed through market mechanisms. Many authors emphasize that this is rarely the case. [...]
[...] As stated by Siroën JM (Opening and economic development) if the links between trade liberalization, foreign trade and growth are not always established, it appears as though the developing countries that are trying to fit into the channels of global trade, are experiencing strong growth This grow is necessary but is not sufficient for development. This trend will increase with the arrival of high-potential countries such as China, Brazil or India. Michel Aglietta entered the current crisis and brought in a series of structural changes that have affected not only the developed countries, the heart system, but also the emerging markets and the new entrants. [...]
[...] II) But free trade is still the cornerstone of the global economy today Structural explanations for the maintenance of free trade Patrick Artus feels that free trade has to be preserved as a backdrop. According to him a dreaded scenario is popping up everywhere in terms of bias, with a sharp contraction of world trade, which is already in bad shape. This contraction will cause difficulties for all exporting countries. This will lead to a general decline in domestic demand. [...]
[...] It is quite in line with the general trend to think that free trade has shown its limits. Capitalism, too, questioned the fact that the crisis was caused in part by traders who had speculated without really paying attention to their investments. Today, we can see U.S. unions oppose imports from countries with low wages vehemently. Since the financial crisis hit in September 2008, world trade has fallen by one third. People prefer to draw on stocks. Credit needed for business transactions is scarce. [...]
[...] The theory of free trade is questionable and has been discussed in recent years Free trade has been challenged only for a small span of thirty years In the early 1970s, a new approach emerged, which relied on the fact that, contrary to the comparative advantage theory, the competition at international level has little to do with perfect competition. We live in a world of imperfect competition particularly characterized by economies of scale and innovation. The firm or the country that is at the top is so fortunate. [...]
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