Question

In: Economics

Be sure to address each point in the question and explain your argument carefully. 5. Critically...

Be sure to address each point in the question and explain your argument carefully.

5. Critically assess the liberal view that international trade is a ‘positive-sum’ game in which all nations can benefit.

Solutions

Expert Solution

A positive sum game arises in which everyone wins and there is no cost involved for the other party. In short no one wins at the cost of the other losing a benefit, both the parties win.

International trade benefits the importing and the exporting country. The exporting country has the economies of scale to produce huge quantity of a specific good, with less number of inputs to produce a specific output as compared to the importing country. The importing country gets the access to products and is able to buy the products at affordable rates and address the demand situation. Thus both countries benefit at no cost to the other party.

There are several other benefits which emerge with international trade, such as access to demand when local demand is lacking, access to technology and services wherein the developed countries impart their knowledge as the developing world becomes their market, without which there would be less demand for their goods.

The chances of it being a positive sum game will further increase if trade becomes fairer and countries don't exploit by way of tariffs and subsidising local industries in the long run.


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