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WEEK 4: LESSON
Table of Contents
Free Trade
International Trade
Scholars have been trying to account for the patterns of international trade since the
15th century. Currently, approaches to trade range from free to managed, mercantilist to
controlled, and even, in extremely rare cases, to no trade at all.
At its heart, international trade allows a country to specialize in the manufacture and
export of products that it can produce efficiently and to import products that other
countries can produce more efficiently. Trade allows people to gain access to goods
they would not normally be able to access, as well as to minimize costs by specializing.
Over time, the growth of production and consumption in the United States, other
advanced countries, and developing countries continues to follow the product life-cycle
theory. For the United States, consumption exceeded production, thus the need for
imports. For other advanced countries, production exceeded consumption, thus leading
to exports. Finally, for developing countries, production exceeded consumption but lags
behind exports of the other advanced countries