Political Economy_Developing countries

Question 1

State three political arguments for free-trade.

Answer 1

1. The conventionally measured cost off deviating from free-trade are usually large.
2. There are other benefits associated with free-trade that are hard to quantify.
3. Any attempt to create a sophisticated trade policy is at risk of being subverted by political actors.

Question 2

The market failure argument is often cited as an argument against free trade, what would you respond?

Answer 2

1. It is hard for economists let alone anybody do properly diagnose a market failure and apply the right policy so as to correct it.
2. The market failure should be adressed directly instead of through trade policy.