Extract from “TPP is about many things, but free trade? Not so much”

Free trade has a specific meaning for economists. The notion that free trade is good is grounded in the theory of comparative advantage. First developed in 1817 by David Ricardo, it states (simplifying quite a bit) that if countries specialize in what they are best at, they can make themselves better off through trade. Costs are lowered, production is maximized and people can buy imports at prices lower than would have prevailed had they produced everything themselves.

Many conditions have to hold (and they often don’t) for comparative advantage to work in the real world. Regardless, pro-free-trade arguments implicitly rely on the idea of comparative advantage.

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