Against free trade: Neoclassical and steady-state perspectives
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The author argues against free trade as a “default position” for international trade. He shows that arguments for free trade based on comparative advantage do not hold in reality. First, free trade makes cost-internalization for single countries difficult leading to standard-lowering competition and misallocation. Second, the international mobility of capital leads to absolute rather than comparative advantage for single countries, thus leading to maldistribution. Finally, the ecological basis seriously limits the scope for catching-up. Priority should be given alternatively to domestic production of a steady-state type with balanced trade.
Key wordsInternational trade Standard-lowering competition Capital mobility Steady-state Ecological basis
JEL-classificationF19 F21 Q32
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