Free Trade Agreement and Economic Liberalisation in The Modern Conceptual Ideas Growth and Myth and Reality.

Abstract

Free trade refers to a situation where a government does not attempt to restrict what its citizens can buy from another country or what they can sell to another country. The classical trade theories of Smith, Ricardo, and Heckscher-Ohlin predict that the consequences of free trade provide both static economic gains (higher levels of domestic consumption and more efficient utilisation of resources) and dynamic economic gains (stimulates economic growth and the creation of wealth). David Ricardo's 'theory of comparative advantage' is regarded in economic literature as a proponent of free-trade. According to Ricardo, a country should specialise in the production of product(s) that it can produce most efficiently and trade them for product(s) produced by other countries. Again, all nations that participate in international free-trade will realise economic benefits, as trade is a positive-sum game and not a zero-sum game.

Keywords: Foreign Trade, Foreign Trade Agreement, Liberalization, Economic Development, Economic Zones