The worlds poorest countries are at a competitive disadvanta

The world’s poorest countries are at a competitive disadvantage in every sector of their economies. They have little to export. They have no capital; their land is of poor quality; they often have too many people given available work opportunities; and they are poorly educated. Free trade cannot possibly be in the interests of such nations! Discuss.

Solution

The disadvantages faced by poor countries are factually correct. But free trade is potentially beneficial for them, despite such weaknesses.

If poor countries trade as per their comparative advantage, they will benefit from trade. If a country specializes in that good which it can produce at a lower opportunity cost relative to another country. the said country has comparative advantage in that good. In addition, the Heckscher-Ohlin model has shown that a country benefits from trade if it exports that good, which uses the country\'s abundant resources intensively. So, if a poor country with high population specializes in producing a labor-intensive good and exports it, the country will benefit from trade provided there are no trade barriers and even if there are trade barriers, they\'re uniformly applied by the imposing country on all other country without any discrimination.

However, these operatin conditions may not be realistic and are violated in real life. Therefore, poor countries are not seen to gain much by free trade, since free trade is either non-existent, or is veiled under implicit barriered trade.