Free Trade Causes

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Introduction: Free trade reached its peak during the 19th century, with the promotion of trade openness as the key to globalization and the best way to empower countries – especially of developing ones-. Trade liberalization sought to increase countries living standards and thus, speed up the “catching up” process, by exposing developing countries to the development and knowledge of the developed world. As well as by the spread of capital from where it was abundant to where is not. Nonetheless, uncertainties on whether free trade fosters global economic growth or, fills up the pockets of the rich countries at the expense of cheap labour and raw materials of the developing countries, has lead to discussion. For this, in this paper I will start…show more content…
Nonetheless, it supported the ideal that governments should not intervene in the market economy. And, also in contrast with mercantilism, believed nations benefit from both domestic and international trade. Causes of Free Trade birth: During the 17th and 18th century, world trade expanded continuously, but it wasn´t until the 19th century that it reached its peak. Certain elements and situations along history are considered to have favoured countries openness to free trade since the 70´s and allowed this era of globalization. Starting with the introduction of new technologies: telegraph, containers, railroads and canals. These facilitated exportations and communication, as well as lowered transportation cost, making more and more goods tradable as well as profitable. And, at the same time, countries became more in favour of free trade (financially…show more content…
Institutionalism arose subsequently to the OPEC crisis, that lead to an epoch of stagnation and United State´s decline on the one hand, and a very fast economic growth in West Germany and Japan economies that were going to rival the United States on the other hand. This new school of thought defended the idea that free trade created interdependence and that free trade only works when there is reciprocity. For this reason, when there is mutual dependence between countries, you need institutions to ensure reciprocal negotiations (cooperation and coordination): reduce introduction costs (marginal costs). But also, institutions are important because they provide “a shadow for the future,” they provide certainty, predictability and transparency in terms of how states negotiate within these

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