This week, we’ll look at trade and how free trade can be beneficial for everyone.
From the time we are children, we swap things with others. We give and take for mutual benefit. This same principle of exchange and enrichment is what motivates trade between countries. Trade is widely regarded as a spur for economic growth. It encourages countries to specialize in certain areas of strength. This enables the world to produce more goods, and more kinds of goods than it otherwise could.
Since World War II, international trade has increased seventeen fold, helping to ignite economic growth around the globe. Despite the obvious benefits of free trade, there are many who are motivated to limit it. Tariffs, trade bans, and quota restrictions can be used as weapons to punish competing and opposing nations. This could lead to retaliation and a devastating trade war.
Some critics argue that not all trade is good trade. Trading with poor developing countries, where wages are usually lower and working hours longer than in developed countries, can create an imbalance. The result can be a loss of jobs in high-wage economies. Despite these concerns free and open trade should be embraced. Embracing the alternative is child’s play.
Do you think that free trade is essential in the modern world? How does being a member of the EU help Spain with trade?
“Kal Draws Trade” is one of a series of six videos explaining economic concepts by Kevin “KAL” Kallaugher, the resident cartoonist for The Economist. Other videos in the series include “Taxation”, “Hyperinflation”, and “Dumping”.