Regional Trade Agreements versus Global Trade Liberalization

In the globalizing economy of the late 20th and early 21st century liberalized trade has been sought by way of regional trade agreements and broader global trade liberalization. The policy choice between these two approaches has created debates among economists and politicians concerning which is a better strategy for various countries and for the global economy as a whole, and whether the two approaches are complimentary or contradictory.

Free Trade Theory originating in the 1930s but still believed today-

Today's economists, primarily neoclassical, are from a school of thought originating in the 1930s believing that the economic market place is flexible wherein supply, demand, prices, wages, interest rates, and other economic random forces move in response to uncontrolled allocated or unallocated resources.

Over the past thirty years, since the mid-1980s, more modern economist have shown that international trade is not a random market as thought by the neoclassical economists, but influenced by government policies, RTA, and other modern trade arrangements

Since the mid-1980s, the following policies challenge the Theory of Free Trade:

a) Policies which are proven to hurt poor nations such as non-trade barriers (CH 5), subsidies (CH 5); strategic advantage (CH 6), import substitution (CH 7), multinational corporations (CH 9)

b) Policies put in place in the 1970s and 1980s to help developing nations such as the WTO, IMF (CH 6), buffer stock trading (CH 7), and multilateral contracts (CH 7), export-led growth, regional trade arrangements (RTA) (CH 8), Free trade areas (FTA) including different levels of economic integration: customs unions, common market, and monetary unions (CH 8, page 265),

c) Suggested Read: "Does the Fair-Trade Movement Help Poor Coffee Farmers?) 

a) Explain the activities of multinational corporations (MNC) by applying the classical trade theory

b) Analyze the welfare effects of trans-border flows of labor (migration)

Begin your research into regional trade agreements versus global trade liberalization by locating professional and academic journals and select current research articles published within the last five years on the topic.

Then develop a two-page paper summarizing and contrasting the main arguments on both sides of the issue. 

Paper Outline: 

- INTRODUCTION

- BODY:
a) Past Economic Theory
b) Modern Economic Theory
c) Reconciling the Theories
d) Which are Better Strategies for Various Countries and for the Global Economy?
e) (Who are the losers and who are the winners under the various theories?)

- CONCLUSION

- REFERENCES