Assessing the Benefits of Free Trade

  • Daniel Drache


Trade-centered strategies have become the preferred option for governments in the nineties. These policy initiatives need to be assessed to determine whether they are delivering their promise of economic renewal and a higher standard of living. There are two aspects to consider. First, because international markets are highly complex entities with many unintended consequences, a policy of free trade also has many unanticipated effects on state policy (Krugman, 1987). Second, the relocation of domestic and international resources poses major problems of adjustment and income distribution for workers and employers who have to bear the brunt of economic restructuring (Holland, 1980). With governments now constrained to use tariffs and subsidies to restructure and reorganize industry, this trend also raises unsettling questions about the benefits from increased capital mobility and investment flows that have occurred as a result of forming free trade areas. If enhanced access resulting from dismantling trade barriers fails to materialize, the issue of abrogation also has to be squarely addressed.


Free Trade Trade Liberalization Canadian Dollar Legal Text Free Trade Area 
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© Ricardo Grinspun and Maxwell A. Cameron 1993

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  • Daniel Drache

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