ABSTRACT
In the international division of labor, periods of liberalization and of protectionism have alternated in economic history. Historic periods of protectionism were followed by epochs of free trade and vice versa. In the international division of labor, periods of liberalization and of protectionism have alternated in economic history. Tariffs and other trade barriers increased; the 1930s saw devaluation races in which states tried to stimulate their exports by devaluing their currencies and thus improving their employment possibilities. Exporting countries enter export restraints under the threat of facing even harder entry barriers for their exports. Industry and trade unions of the industrialized countries demand a worldwide equalization of conditions under which firms compete, focusing often on equal social and environmental standards. External trade permits specialization in producing the good for which a country has a comparative advantage. Free external trade ensures intensified competition between suppliers. The domestic producers have to face up to the foreign supply.
