ABSTRACT
According to the now dominant neo-classical (liberal) school of economics the ideal structure for world trade is one based on open and free markets. Free trade is based on the efficiency maximizing principle of comparative advantage. The logic of comparative advantage is disarmingly simple: a country should produce and export goods which it can manufacture more efficiently than its trading rivals; alternatively it should import goods produced with greater efficiency by other countries. From a liberal point of view the aim is to secure an international division of labour based on economic efficiency. Because of factor endowments in capital, labour and land particular countries will have a "natural" advantage in some economic sectors, which they should exploit.
