Advocates of Trade Liberalisation

Trade Liberalisation and Development

In this course, Dr Penélope Pacheco-López (University of Kent) explores the relationship between trade liberalisation and development in the developing world. In the first module, we think about the advocates of trade liberalisation, looking at the free trade doctrine from its 18th century origins to its present dominance in global economic policy. The second module then outlines the main criticisms of trade liberalisation, most importantly its tendency to create balance of payments deficits and increase unemployment. In the third module, we examine the argument that economic growth requires trade liberalisation, and whether this is supported by empirical evidence. The fourth module then considers the often negative effects of trade liberalisation on rates of poverty and income inequality in the developing world. In the fifth module, we focus on the role of international organisations, most notably the World Trade Organization, World Bank and International Monetary Fund, in imposing trade liberalisation policies on developing countries. We conclude with a sixth module which attempts to answer the overarching question of whether trade liberalisation can support development.

Advocates of Trade Liberalisation

In this module, we think about some key advocates of trade liberalisation and their main arguments. We focus on: (i) the origins of the free trade doctrine with classical economists like Adam Smith and David Ricardo, who argued that the removal of barriers to international trade would lead to economic growth by enabling countries to specialise production; (ii) the response that liberalisation may lead to unemployment rather than greater specialisation, as seen in Mexico after it joined the NAFTA free trade agreement; (iii) John Stuart Mill’s argument that free trade promotes global exchange of ideas and technology; (iv) the current dominance of the free trade doctrine, and the intellectual basis of this with neoclassical economists like Friedrich von Hayek; (v) how trade liberalisation is defined and measured, and how it is distinguished from trade openness.