International Trade: Old Theories, New Theories and the Single European Market

Free trade between different countries is a good thing. Few assertions in economics are without controversy, yet the desirability of free international trade for the welfare of all nations has for many years been close to uncontested. During a period in which macroeconomics went through great turmoil and development, the theory of international trade developed little throughout the 1970s and 1980s. The basic model of comparative advantage, first suggested by Ricardo in 1817, was seen as a clear explanation of why it is desirable to encourage full and free trade between all nations. To suggest otherwise might be seen as a lack of perception and understanding of the relevant theory. Any restriction of trade was at best short-sighted and at worse wholly damaging to all concerned.