Free trade Essay

2289 Words Jun 29th, 2015 10 Pages
Module Code: PM503 2T

Class/Group: K

Assessment Title: Essay

Assessment Topic: Critically evaluate claims that free trade is the most effective way to increase economic growth and global prosperity.

Tutor Name: Iwona Pringle

Student ID Number: 2172402

Date of Submission: 23 March, 2015

Essay topic: Critically evaluate claims that free trade is the most effective way to increase economic growth and global prosperity.

Free trade is refer to the unrestricted export and import of products or services in international markets without tariffs or duties (Sinn, 2014:8). Since the father of economics, Adam Smith proposed that international trade could promote economic growth, the effects of free trade on economic growth
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To begin with, Daly & Goodland (1994) argue that the environmental quality of several developing countries where have loose regulations and low pollution taxes may be degraded due to trade liberalization could allow pollution-intensive industries in industrialized countries to move there. For example, as the increasing number of polluting industries entered into Indonesia, the indexes of carbon emissions and water pollution rose by 134% and 162% respectively between 1992 and 2000, when the significant trade liberalization occurred in this country (Strutt & Anderson, 2000:203). Similarly, in China, the emission of air pollutants (SO2 and dust fall) almost doubled because of the low taxes on industrial pollution since entering the WTO (Shen, 2008:997). In addition, free trade may tend to expand the scale of economy, which is likely to cause environmental degradation (Damania et al, 2003:490). According to Dean and Gallagher (2010), most economic activities could consume raw materials, create waste and pollution, and consequently damage the environment. For example, the North American Free Trade Agreement (NAFTA) which was signed by Mexico, the US and Canada in 1992 promoted the exports of resource-intensive products from Mexico to the US so that the increasing number of resource-intensive companies were established to meet the exports. However, the growing number of companies caused more consumption of resource, such as the consumption

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