Global Economic Development As A Trade Policy Essay

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Global economic development as a trade policy
However, would the idea of mercantilists who emphasize the only national benefits, productivity, or competitiveness fit to the current globalised world? Krugman (1996) denies the idea of mercantilism as they do not fully understand the meaning of comparative advantage. Comparative Advantage is an economic law made by David Richard in 1817 who expanded Adam Smith’s Wealth of Nations. Comparative Advantage law encourages free trade that stimulate market competition and industry specialization to a country to export. As the scale of economy works in specialization, it would make production of goods more efficient and thereby reduces the aggregate cost within the framework. Therefore all the citizen could receive the benefit (Todaro 2014).
With this Comparative Advantage law, the global partnership has introduced the change of norm in the trading. World Trade Organisation, for example, has been trying to create the global framework of free trading since the time of its predecessor the General Agreement on Tariffs and Trade (GATT). GATT was founded “to establish an orderly and transparent framework within which barriers to trade could be gradually reduced, and international trade thereby expanded”(Healy et al. 1998). Although this framework treated all members as equal as possible (Most Favoured Nation (MFN) principle), some exceptions and waivers were prepared with the acknowledgment of circumstances in developing countries,
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