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The theory and practice of free trade

Author

Listed:
  • David M. Gould
  • Roy J. Ruffin
  • Graeme L. Woodbridge

Abstract

David M. Gould, Roy J. Ruffin, and Graeme L. Woodbridge argue that free trade is supported both by economic principles and evidence from countries that have followed open market policies. The authors demonstrate that the countries whose markets are the most open have higher real output and economic growth. ; The authors show that many arguments for protection obscure the benefits countries derive from international trade. High-wage countries not only can compete with low-wage countries, they dominate the world economic stage. Trade deficits or surpluses are not inherently bad or good, but rather reflect a country's consumption and investment decisions over time. Moreover, there is no evidence to suggest that imports cause systematic unemployment or that exports create systematic employment. The authors explain why industrial policies and protection designed to promote particular industries usually backfire; trade policies usually reflect the lobbying efforts of the most vocal and powerful self-interest groups.

Suggested Citation

  • David M. Gould & Roy J. Ruffin & Graeme L. Woodbridge, 1993. "The theory and practice of free trade," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Dec, pages 1-16.
    • Handle: RePEc:fip:fedder:y:1993:i:dec:p:1-16
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    File URL: https://www.dallasfed.org/~/media/documents/research/er/1993/er9304a.pdf
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    Citations

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    Cited by:

    1. R. I. Udegbunam, 2002. "Openness, Stock Market Development, and Industrial Growth in Nigeria," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(1), pages 69-92.
    2. Monika Jain, 2021. "Was India Right in Not Joining RCEP? A Cost–Benefit Analysis," India Quarterly: A Journal of International Affairs, , vol. 77(4), pages 542-559, December.
    3. Ben-David, Dan & Loewy, Michael B, 1998. "Free Trade, Growth, and Convergence," Journal of Economic Growth, Springer, vol. 3(2), pages 143-170, June.
    4. Tyler Cowen & Robin Grier, 1996. "Do Artists Suffer From A Cost-Disease?," Rationality and Society, , vol. 8(1), pages 5-24, February.
    5. Robert L. Hetzel, 1994. "The free trade debate: the illusion of security versus growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 39-58.
    6. Marshall, Maria I. & Marsh, Thomas L., 2003. "Endogenous Protection In The Mexican Corn And Sorghum Market," 2003 Annual meeting, July 27-30, Montreal, Canada 22242, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Free trade;

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