Protectionism within global trade

Abstract

While the debates of international economists and diplomats seem distant and abstract to most people, the impact of growing trade over the past several decades has become a persistent reality for most of us. Trade touches consumers' lives almost every day. It is an issue real in a way that politics is not. As well, for average citizen, the consequences of trade decisions are increasingly dramatic and real. In this matter, the trade is 'felt' more directly than most of the political changes and incidences occurring worldwide. For most of us, they are merely things that happen on the nightly news. These issues stimulated my decision to try to present the case of free trade. It is a subject which stimulated enormous outpouring of research in international economics. A controversy in itself. A political, social and economic dilemma. An issue which influenced a wide debate among politicians, scholars, academics. In debating it, the overall impression somehow emerged that trade matter is simple choice between free markets and government intervention. Between free trade and protectionism. As well, that these notions carry the same idea worldwide and that result from them will be same wherever implemented. Anything but that. The complexity of trade and its impact, whether felt directly or indirectly, necessitate approach that will seek to comprehend objective picture, and analyze the results stemming from such policies. Of course, the effects that such notion extracts are complex and far-reaching. Where one stand in regard to it depends a great deal whether or not one assumes certain perspective, and proceeds from there in his/her research. What do the data reveal? Nothing conclusive. Statistics can support either side in many arguments, and there is so much variation in the experience of individual countries that specific examples can be found to buttress or refute just about any general claim. One for sure, it is at the extremes that the argument seem weakest. So, what is exactly free trade? And how does the protectionist strategy finds its place within global trade? Is the notion of free trade uniform idea, or does such concept weights differently, depending if seen from the perspective of industrialized nations or Third World countries? Finally, 1± the idea of free trade and its success is strongly backed by most of the industrialized nations, does such policy presents principle force within global trade? These, and other similar dilemmas and questions, are the influence behind this work. The size and controversy surrounding free trade render our expectations to inconclusive result. Yet, if the final outcome of this effort produces more insight into the area of trade, the task will be accomplished. Chapter One is an attempt to define the theoretical structure behind free trade. Starting from Adam Smith and the early theories of comparative advantage, it comprehends the laissez-faire as the virtual religion for most of the Western economists. While accepted within industrialized world as free-market liberalism, it reemerged as modernization approach in Third World. The dependency paradigm takes an opposite point of departure, stating the external factor of the development and the placement within the structure of world economy. Chapter Two evaluates the overall process of development in the Third World. Pointing to the different meaning of free trade for these countries, it evaluates the link between structural changes of developing societies with the free trade issue. Here, the try is to point to wide context of economic development; its relation with the necessary change in political and social context of these states, and the role of trade as an element of future development. Chapter Three focuses on certain trade policies pursued in developed world. While the notion of free trade is strongly backed, publicly and theoretically, by Western politicians and leaders, the actual implementation of this policy is constrained by continuous protectionist tendency. Such a trend, felt even more during 1990s, produced feelings of anxiety and set a stage for future confrontations.