Essay about Free trade

2287 Words Jun 2nd, 2015 10 Pages
Module Code: PM503 2T

Class/Group: K

Assessment Title: Essay

Assessment Topic: Critically evaluate claims that free trade is the most effective way to increase economic growth and global prosperity.

Tutor Name: Iwona Pringle

Student ID Number: 2172402

Date of Submission: 23 March, 2015

Essay topic: Critically evaluate claims that free trade is the most effective way to increase economic growth and global prosperity.

Free trade is refer to the unrestricted export and import of products or services in international markets without tariffs or duties (Sinn, 2014:8). Since the father of economics, Adam Smith proposed that international trade could promote economic growth, the effects of free trade on economic growth
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Conversely, a growing number of pollution caused by free trade may reduce the economy. In other words, when the costs of pollution protection and treatment overweigh the profits brought by free trade, the national economy would be reduced (Cole & Elliott, 2003:363). For example, the great amount of profitable but pollution-intensive companies were established in Mexico due to local government paid more attention to economic growth at the beginning of joining in the NAFTA (Logsdon & Husted, 2000:370). However, Mexico spent over $16 billion to control pollution from 1997 to 2000, which is over 150% of earnings gained by the pollution-intensive companies (ibid). This example indicates that the profits based on the pollution may bring disadvantages to economic growth in the long run.

However, this problem could be solved by promulgating stringent environmental protection regulations before pollution or over-consumption of resource (Beladi & Oladi, 2011:172). For example, forestry as a core industry in Finland is be protected strictly by local regulations (Ståhls, et al, 2011:1842). Specifically, one of the most stringent forest protection regulations stipulates that any company which exceeds the limit number of logging will be closed (ibid). This regulation could not only protect environment and resource, but also establish a sustainable economy.

For global prosperity, free trade could reduce the

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