The Economic Success Of The 21st Century - 1483 Words

In the 21st century it is correct to claim that our interconnected world is becoming smaller. With globalization, the nature of economy and politics is vividly transforming. United States is the best example as the trail blazer of the new policies, changes and with that, U.S. is a role model for world’s powers. Looking from the economist’s perspective of how to explain such advantage, open door trade is one of the factors that explain its success. Great number of economists stands unified in support of free trade. This paper will discuss some major points that revolve around the central idea which explains that in order to achieve economic success in today’s world requires free trade, which entails liberalization to attract international†¦show more content†¦(Krugman 1987,131) Free trade supporters make a point that if we don’t move toward liberalization, the gravit y of protectionism and political interests will pull us back-â€Å"bicycle theory†. (Bergsten 1996, 109). The successful example of bicycle moving forward is the Uruguay Round conclusion. (Bergsten 1996, 109). Following that NAFTA and such, have made a significant progress in resolving debate in the international trade arena. Liberalist economists insist that with openness toward international trade, countries benefit in multiple segments and knowledge is one of the major exchanges which are crucial for improvement. ( O’Brien Williams 2013,112) Therefore, it is important to understand liberalist perspective at first. Economic liberalist view human nature acting rational in order to maximize their self-interest. This theory strongly support the thought where individuals when acting rationally create markets which produce, distribute and consume goods function best free. This way international wealth is maximized with exchange of goods and services which is also a compa rative advantage based theoretical aspect. (Mingst Toft, 2104, 310) With Ricardo’s comparative advantage, it’s important to mention specialization of a commodity that a specific country can produce more efficiently in exchange for another commodity. Therefore,