ABSTRACT
This chapter presents different perspectives on the subject of international trade. It begins by presenting the classical economic contributions regarding trade theory by Adam Smith and David Ricardo. It shows the reasoning behind why free markets promote specialization and, in turn, efficiency and comparative advantage. As will be shown, comparative advantage is the logical argument behind why free trade is desirable—it is beneficial to both countries. The chapter then discusses other important advantages of trade, but also equally important disadvantages. These illustrate that trade is a much more complex topic than may appear just from looking at the logic of the comparative advantage model. Next, the idea of protectionism—or restrictions on trade—is introduced, with examples such as tariffs and quotas. Finally, the chapter discusses some considerations on the “fairness” of trade, distinguishing between “free” and “fair” trade.
