International trade theory suggests that it is possible to improve everyone's welfare by opening
a country's markets to international trade. Theory also suggests that international trade can
provide consumers with a wider variety of products.
Nonetheless, some people oppose free trade because they believe that it will adversely affect them.
The very same theories suggest that their fears are not unfounded.
When a country opens its markets to imports of foreign goods and services,
its people will collectively be able to consume more than they did before.
But those gains will accrue to people working in the export-competing sector.
People working in the import-competing sector will suffer losses.
what you will learn
The empirical evidence suggests that developing countries with an outward orientation
tend to provide their citizens with a higher standard of living than ones that protect
domestic industries from foreign competition.
But those statistics reflect an increase in average income.
They do not shed any light on the distribution of income.
So this course will also explore the effect that international trade has on the
distribution of income within a country to understand why some people oppose free trade.