Optimal trade policy
An optimal trade policy in the economic sense is understood to be a trade policy which aims to increase the overall prosperity available to an economy .
General
Outside of the national economy, there are numerous other criteria from a social or political point of view, which, depending on the interests at hand, make the trade policy to be aimed for appear optimal. From an economic point of view, the trade policy pursued is then usually not optimal.
An optimal trade policy can also be related not only to an economy, but to the entire world trade or the corresponding regulations. Then an optimal trade policy is a policy that is of the greatest possible advantage for all trading partners (economies) involved.
classification
In the field of economics, the optimal trade policy belongs to the area of trade and income distribution . Based on the Ricardo model and the Heckscher-Ohlin theory , the question is whether or not free trade is allowed without distortions. Both positive consequences, such as efficiency gains and advantages from increased competition, as well as disadvantages, such as income shifts to the disadvantage of possibly already disadvantaged groups, are considered. The problem of the optimal trade policy runs right through the entire policy of foreign trade and leads to the more recent theory of strategic foreign trade policy .
starting point
According to the conclusions of the Ricardo model and the economics of foreign trade, the entire prosperity or consumption possibilities of an economy can be maximized by allowing (free) trade. In addition to the expanded consumption options through relatively lower prices, domestic monopolies are also exposed to foreign competition. This leads to a need for efficiency and innovation as well as the application of the most modern technologies. By promoting technical progress, the macroeconomic transformation curve is expanded outwards. Furthermore, advantages of mass production and specialization can be better exploited.
Problem
Since the overall prosperity of a country is often not the decisive factor politically, but rather the satisfaction and income level of individual interest groups or individuals in the economy are in the foreground, goals can be shifted. In contrast to a closed economy, the existence of foreign trade leads to an overall increase in prosperity, but individual groups in the economy are economically worse off.
example
By importing textiles from the Far East to Western and Central Europe, consumers in high-wage countries can consume cheaper textiles overall. However, the income of workers in the textile industry in Western and Central Europe is decreasing or is completely lost for them.
Overall, there are short-term losses in industries that compete with foreign imports. In the long term, those groups lose their income from the relatively scarce factors of the now foreign trade economy. First of all, it makes sense to use protectionism (tariffs, import quotas, etc.) to protect industries that are losing due to foreign competition . If such measures are taken, however, the foreign trade partners will introduce similar restrictions, which in turn will damage their own exports. Protectionism continues to lead to fewer increases in efficiency and less pressure to innovate in the affected industries due to less foreign competition. The competitiveness and competitive orientation of the isolated or favored domestic industry on the world market is also suffering from protectionist measures by the state.
The increase in consumption options z. B. through cheaper consumer prices due to cheaper imported goods is overall greater than the negative effects for loser groups. However, the advantages of free trade are usually distributed among a large number of individuals, so that the individual often does not perceive the overall benefit (cheaper textile consumption) as a whole. However, due to negative effects for the individuals in the losing groups, they often lose their entire previous economic basis in the short term. In addition, potential losers from free foreign trade are often better organized and express their interests to politics more strongly than the total number of potential winners.
Individual evidence
- ↑ Brand-Spencer thesis discussed at diss.fu-berlin.de
- ↑ P. Krugman, M. Obstfeld; International Economy, 7th edition, Munich a. a., 2006, p. 109
Literature sources
- Paul Krugman, Maurice Obstfeld: International Economy, Theory and Politics of Foreign Trade , 7th updated edition, Pearson Studium, Munich 2006, ISBN 3-8273-7199-6
- Horst Siebert: Außenwirtschaft , 8th edition, Lucius & Lucius, Stuttgart 2006, ISBN 3825280810