Free Trade versus Protectionism

FreeTrade versus Protectionism

FreeTrade versus Protectionism

Theincrease in the popularity of the concept of globalization has forcedthe developing and developed countries to adopt free trade as one ofthe approaches of reducing product prices and opening up markets.However, this concept of free trade is highly opposed by those whofeel that there is a need to protect domestic economies and limit thenegative effects associated with free trade. Free trade in thiscontext refers to agreements between countries to remove tradebarriers and allow free movement of services and products to competewith domestic goods and services on a level playing field(Chmielewski, 2013). Protectionism, on the other hand, refers torestrictions by the government on importation and export of goods andservices between countries with the main objective of protectingdomestic industries. Although both free trade and protectionism havemerits and demerits, free trade is the most appropriate option forthe global market.

Freetrade has three major benefits that make it more appropriate thanother options suggested in the contemporary global economy. First,free trade facilitates an increase in innovation and efficiency thatbenefits all participants in the global market. This is because freetrade works with different market processes to shift resources tomore prolific uses, which allows efficient industries to grow(Boudreaux, 2013). Secondly, free trade facilitates competitivenessin the worldwide marketplace, which is a significant force thatdrives long-term growth. Third, free trade enhances fairness in theglobal market by ensuring that participating countries apply asimilar rule-based system in treating imports and exports from othercountries. This eliminates the possibility of unfair advantages (suchas regulatory loopholes) that protect some countries from thecompetition. Although free trade promises many benefits toparticipating nations, it is criticized on the grounds that it leadsto loss of employment opportunities through outsourcing andsubjecting domestic as well as newly established firms to stiffcompetition that they cannot withstand.

Manycountries use four approaches to protect their domestic economies,which include enactment of tariffs, subsidizing local products andservices, imposing import quotas, and deliberate devaluation ofdomestic currency. There are two major benefits associated withprotectionism. First, protectionism shields domestic firms fromforeign competition, thus giving them an opportunity to thrive(Boudreaux, 2013). Secondly, protectionism increases jobopportunities in local people following the growth of domestic firms.Although proponents of trade protectionism base their argument on thetwo benefits, protectionism has three drawbacks that can affect thedomestic economy severely. First, protectionism weakens domesticindustries in the long-run because the lack of competition reducesthe need for innovation (Chmielewski, 2013). Secondly, protectionismforces domestic firms to outsource employees in the long-run,especially in technical professions. This is because the protectionof the domestic labor market reduces the need for local employees topursue career development, thus reducing their competence in thelong-run. Third, trade protectionism slows down the rate of economicgrowth and layoffs. This suggests that trade protectionism has moredrawbacks than merits.

Inconclusion, free trade has more benefits than trade protectionism,which means that adoption of free trade is the most appropriateoption for the growth of the global economy. Free trade has moredrawbacks in the short-run, but promises economic growth andsustainability in the long-run. Trade protectionism, on the otherhand has more benefits in the short-run and many drawbacks in thelong-run. This implies that proponents of trade protectionism fail tosee economic growth in the long-run, while those who advocate forfree trade prefer long-term economic growth to short-term benefits.


Boudreaux,D. (2013). Thebenefits of free trade: addressing key myths.Fairfax, VA: George Mason University.

Chmielewski,T. (2013).Free trade versus protectionism.Santa Monica: Demand Media.