Question

Now that you understand the ttheory of international trade if you were the King of your home country how would you follow a policy of free trade or what policy would you put into place.

Answer 1

the trade would depend on many factors. one needs to look at the structure of the economy and the way it is established. this would include an understanding of the resources that the home country possesses. at the same time one would need to look at the capital and the technology available. on the other hand one needs to figure out the products to be imported from the foreign countries. models like comparative advantage by ricardo or the H-O model could also give us some understanding. basically one needs to figure out the resources in which we have the comparative advantage, and the products in which we have a disadvantage. so we could export the resources in which we have an advantage and import the products in which we have a disadvantage.

generally trade restrictions are avoided as free trade is beneficial in most cases. however in some instances it is essential to develop certain industries like power, heavy industries like steel. in that cases these industries can be given a certain degree of protection to protect from the foreign competition. so overall free trade should be practiced, at the same time providing some level of protection for the strategically important industries. again one needs to look at the economic set up of the country before one can give any concrete answers