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Free Trade, Free Trade Agreements, Free Trade Zones

Trade is commerce between countries. When this cross-national border commerce, involving the physical movement of goods and services via several modes of delivery and capital flows, is substantially unencumbered by national barriers, it is called free trade. Free trade is deemed to be driven by market forces and not by governmental edicts.

Opportunity Costs and Comparative Advantage

Free trade is based on what the economist David Ricardo originally called the law of comparative advantage. At its simplest, the law states that a country’s wealth will be maximized when it produces what it can produce the best and then trades this output for all other goods and services. Economists derive what is best going backward: A country is best at what costs it the least to give up. ...

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