ABSTRACT
This chapter explores why international trade as well as cross-border investments often make sense and work to the general benefit of most people. It considers several arguments against free trade. These included free trade as a threat to national sovereignty, the need to protect infant industries, the argument that trade must be fair, and the protection of local jobs and the environment. The chapter helps the reader to understand the costs and benefits for emerging nations engaged in international trade and investments. It considers the sources of comparative advantage as outlined by two Swedish economists, Eli Heckscher and the Nobel prizewinner Bertil Ohlin. The chapter discusses three additional views of the drivers of world trade, product life cycle theory, new trade theory, and Michael Porter's view of national advantages. The anti-free trade arguments associated with the political environment in Europe and the US did reduce world trade and investment.
