Cato Institute (3)

Debunking Protectionist Myths: Free Trade, the Developing World, and Prosperity

Read full article Abstract: More than 170 years ago, Frédéric Bastiat noted in his masterly work Economic Sophisms that the “opposition to free trade rests upon errors, or, if you prefer, upon half‐​truths.”1 Ever since Adam Smith successfully replaced mercantilist orthodoxy with free trade doctrine in his celebrated book The Wealth of Nations, free trade critics have repeatedly challenged the doctrine, offering half‐​truths to bolster their case. In each instance, free trade advocates have successfully exposed the falsehood of arguments made by critics. Although free trade has gained increasing acceptance among policymakers over time, challenges to it have remained omnipresent. The latest of these challenges has manifested itself in increased tariffs on steel and aluminum in the United States and on a number of selected products in India. At the heart of these tariff hikes has been the belief that through targeted protection and industrial policy, governments can produce outcomes that are superior to those that free trade and competition would produce.2 Intellectual inspiration for this belief in recent decades has come from writings of a group of influential scholars who have interpreted the experiences of the highly successful…

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Free Trade and Prosperity: How Openness Helps Developing Countries Grow Richer and Combat Poverty

View video lecture here Free trade provides enormous benefits to developing countries. Arvind Panagariya will describe its impressive record in promoting growth and reducing poverty at a time when some policymakers in rich and poor countries are turning toward protectionism. He will explain how openness was key to the economic success of countries like South Korea and Taiwan and will refute claims that industrial policy, infant industry protection, or measures that erected barriers to trade have worked better than free trade itself. Anne Krueger will comment on Panagariya’s full‐​scale defense of free trade and warn about threats to the liberal, global trade regime. 

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