Free Trade and Liberalization

Paper Summary:

This paper discusses the argument about free trade that has been taking place over the last several hundred years. The paper discusses the advantages and disadvantages of free trade and suggests that free trade is not only necessary, but also beneficial to the overall improvement to quality of life in all markets. The paper concludes that emerging and developing markets should gradually liberalize their markets, but only after they are allowed to develop the physical and technological infrastructure that will allow them to compete on an equal footing with the most developed markets.

Table of Contents:
Overview
Free Trade
Issues and Arguments
Position Statement

From the Paper:

"Because of the cautionary tales of sudden capital outflows in developing and emerging markets, these countries should build some sort of protections into their financial markets to prevent sudden cash outflows. While many analysts would argue these types of structures are protectionist in nature, these markets would be well-advised to erect them. It would be foolish to do otherwise. While no one is arguing for trade barriers per se, the financial markets within which trade occurs in these emerging markets must be protected from foreign investors who are not interested in long-term returns and thus are inclined to drop out of the market at the first sign of a slowdown or financial trouble. Emerging and developing markets should gradually liberalize their markets but only after they are allowed to develop the physical and technological infrastructure that will allow them to compete on an equal footing with the most developed markets."

Sample of Sources Used:

• Coughlin, Cletus, Alec Chrystal and Geoffrey Wood. "Protectionist Trade Policies: A Survey of Theory, Evidence and Rationale." Federal Reserve Bank of St. Louis, Jan/Feb(1988).
• "Going Solo: Poor Nations Must Manage Their Own Money Flows." Global Investment (Special Report)
• "Open Markets Matter: The Benefits of Trade and Investment Liberalisation." Policy Briefs, OECD, Oct. (1999).
• Rodrik, D. "Trading in Illusions." Foreign Policy, Mar./Apr.(2001).

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