GB 500 Purdue University Global Trade Economic Growth and Job Creation Questions

The gains from specialization and trade are based on comparative advantages, which reflect the relative opportunity costs of production. When countries specialize in producing goods and services for which they have comparative advantages, total production in the global economy rises. Trade advocates argue that this increase in the size of the economic pie can be used to make all trading countries better off through international trade. Economists also use the principle of comparative advantage to advocate free trade among countries as a better policy.Based on the above summary and the detailed descriptions of the international trade issues in the textbook (Chapter 38) discuss the following questions.Does free trade contribute to the improvement of economic well-being? How does trade stimulate long-term economic growth? Explain.Who gains and losses from free trade among countries, and how do the gains compare to the losses? Explain using examples.