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“Why do most states try to restrict trade?”

ECOP1003
31st August 2009

Jeffrey Chiang
309021863

Literally, “trade is the oldest and most important economic nexus among nations” (Gilpin 1987: 171); in fact, “trade along with war has been central to the evolution of international relations” (ibid). Trade has been considered essentially important for centuries for the reason that it provides wealth from the taxation of trade for politicians and the states (Gilpin, 1987). In the years since World War II, world trade has technically become free trade (Economist, 2009). By definition, free trade is a term that is used to describe “the ability of people to undertake economic transactions with people in other countries free from any restraints imposed by governments or other regulators” (Economist 2009: 1). As a result of free trade, “the volume of world merchandise trade at the start of the 21st century was about 17 times what it was in 1950, and the world's total output was not even six times as big” (ibid). Though free trade gives advantages to developed nations and businesses, it is somehow a destructive tool for developing countries and firms. Therefore, mercantilists oppose liberal trade and support the idea of limiting trade to make sure that a country or firm does not take advantages over another in a negative way.
Though free trade has grown rapidly since 1950 and has been extremely beneficial to various states, “trade has another and more controversial effect, and that is its cultural effect, its impact on values, ideas, and behavior of a society” (Gilpin 1987: 172). While most states tried to limit trade, Gilpin (1987) states that numerous economic nationalists or mercantilist writers consider trade as a negative concept, “believing it to be destructive of traditional values and also corrupting in its encouragement of materialism and the pursuit of

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