Trade and the promise of global welfare: Economics and nationalist gimmicks

George Kararach ()

Chapter 9 in Liberating Economics From Ideologies and Dystopia, 2025, pp 106-116 from Edward Elgar Publishing

Abstract: The standard rationale in the economic literature is that trade liberalisation improves efficiency in the allocation of scarce resources, enhances global economic welfare and contributes to long-term economic growth. However, while there might well be long-term gains from opening their markets, liberalising economies are likely to face some short-term adjustment costs. This is because, as economies open, a country's imports use existing channels, while its new export opportunities often come from different sectors that have yet to sufficiently develop production capacity. The international community recognises the importance of trade for development through initiatives such as Aid for Trade, Financing for Development and, most importantly, the World Trade Organization (WTO) Doha Round of Trade negotiations. Yet, trade today suffers from several obstacles most driven by national and geopolitical dynamics. Neoliberal economists seem to suggest that the liberalisation of the economy, abolishing unnecessary regulations, is a “costless” way of reducing transaction costs and improving the economic system. But given the anecdotal evidence, should (developing) countries confidently rush towards liberalising their economies? The answer is that they must be more cautious towards dashing to trade competition. Economic research today recognises that the relationship between trade openness and growth is more complex than a simple causation. Trade liberalisation does not automatically increase trade, let alone growth. The impact of trade openness depends on national context, rather than on the application of a theoretical demonstration. The reality is that trade liberalisation has different effects on poverty in different countries, depending on a wide range of factors, including macroeconomic stability, infrastructure and the financial sector.

Keywords: Global welfare; Trade liberalisation; Allocation efficiency; Aid for Trade; WTO; Trade openness (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035316175
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/doi/10.4337/9781035316182.00017 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:22521_10

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Jack Sweeney ().