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An investigation into the limits of Fair Trade as a development tool and the risk of clean-washing, HEI Working Papers, vol. 6, Geneva: Economics Section, Graduate Institute of International Studies, October. Mohan, S. (2010), Fair Trade Without the Froth – a dispassionate economic analysis of 'Fair Trade', London: Institute of Economic Affairs.
The logic of formal trade agreements is that they outline what is agreed upon and specify the punishments for deviation from the rules set in the agreement. [1] Trade agreements therefore make misunderstandings less likely, and create confidence on both sides that cheating will be punished; this increases the likelihood of long-term cooperation ...
According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency. Most trade barriers work on the same principle: the imposition of some sort of cost (money, time, bureaucracy, quota) on trade that raises the price or availability of the traded products .
Strategic trade theory suggests that in some industries global economic interaction gives rise to zero-sum competition over the excess returns available in oligopolistic industries. [ 6 ] In the absence of intervention by any government, the firm that is the first to enter a particular industry will win and by doing so will deter entry by ...
Experts who support such free trade agreements argue that these agreements increase competition while offering business the ability to reach larger markets. Critics of bilateral agreements claim that a larger nation, such as the United States , can use these agreements to unfairly push smaller states into much harsher work loads than the World ...
Economic interdependence is the mutual dependence of the participants in an economic system who trade in order to obtain the products they cannot produce efficiently for themselves. Such trading relationships require that the behavior of a participant affects its trading partners and it would be costly to rupture their relationship. [ 1 ]
According to mainstream economics theory, the selective application of free trade agreements to some countries and tariffs on others can lead to economic inefficiency through the process of trade diversion. It is efficient for a good to be produced by the country which is the lowest cost producer, but this does not always take place if a high ...
A successful agreement must be flexible and governments need to accept that it will need to evolve. Trade agreements must generate relevant reforms in areas such as customs documentation, but also more fundamentally in relaxing rules for cross-border transportation. Selling to new markets requires adequate finance.