Free Trade and Protectionism: The Global Struggle for Economic Dominance

Abstract

This paper aims to explore the dynamics of free trade and its challenges with a focus on the protectionist policies implemented by leading global economies like the United States and China. Through the lens of David Friedman’s Iowa Car Crop thought experiment, it highlights how countries with comparative advantages can access free trade to bolster their economy, yet also examines the reasons nations employ protectionist measures such as tariffs and quotas. The analysis of the U.S.-China conflict and Brexit illustrates how protectionist measures often provoke national retaliation and hinder global economic growth. In addition, this paper underscores the role of hegemonic power in shaping global trade policies and argues how economic strength is developed with competitiveness and innovation rather than protectionism.

The World Bank national accounts data and the Organisation for Economic Cooperation and Development (OECD) national accounts data files were utilized to examine the long-term changes on the shares in world GDP and to analyze the effects of China’s dominant production and other events as well. In addition, expert opinion reports written by experts such as Adam Smith and South Korean economist Ha-Joon Chang provided valuable insights into the broader economic implications of these shifts.