Free Trade and Globalization: Progress or Problem?

Chapter 9 presents several central tenets of liberal economics: free trade, absolute/comparative advantage, and globalization. These ideas are particularly important in today’s world, with the increasing power and appeal of market capitalism and the forces of globalization. In this exercise, you will consider whether the elimination of trade barriers and investment between countries (“free trade” for short) is GOOD or BAD for countries, especially those who are developing.

You are the director of the Center for Global Economic Justice, an organization committed to improving quality of life for people in developing nations. Make a recommendation FOR or AGAINST free trade as a means of accomplishing this goal. Your recommendation should be in the form of a one-page memo that will be provided to governments in both developed and developing nations and to international organizations like the World Trade Organization. To defend your recommendation, you must include information about the effects of free trade on various social and economic factors within developing nations. Cite all Internet sources appropriately.

I. Concepts. Review free trade, absolute/comparative advantage, and globalization.

II. Gathering Evidence. Gather information and evidence from reputable Internet sources. The University of Iowa Center for International Finance and Development has links to pro- and anti-free trade (or globalization) organizations and resources at www.uiowa.edu/ifdebook/features/links/globalization.shtml.

Below is a list of economic and social factors. Choose at least four of these factors and find evidence about how free trade affects them in developing nations:

• aggregate economic activity (e.g., GDP)
• efficiency in the production of goods
• employment of women
• environmental health and levels of pollution
• income gap between wealthy and poor residents
• legality and use of child labor
• overall poverty or income levels
• prices of necessary goods or services, such as food, housing, and health care
• unemployment
• worker rights and safety

• Citing the sources you used, summarize the evidence you found for each of your chosen factors.
• Based on the four factors that you have analyzed, provide a preliminary answer to the question of whether free trade is good or bad. If some factors are improved by free trade and others are not, coming up with your answer will involve deciding which factors are more important and should therefore be given greater weight in the decision.

III. Prepare your memo.