Sunday, November 25, 2007

Free trade seems to be a rather recent policy. Why were Governments more protectionists in the past?

Governments in the past acted in a manner that fulfilled the demands of their supply market. Exploring the need for demands of these people who made goods which were supplied to the market, we find that they were apprehensive about competition and since there was an environment which empowered their governments to exploit the market because of their political power, they preferred using this as a means to dictate terms to the market. The British Empire for example had wide areas of the World under its control and this enabled them to fulfill the expectation of its producers which was a protectionist policy at the cost of expectations of the local market. The affordability for a protectionist policy enabled governments to take it up.
With the decline of imperialism, the control of the imperialist forces over the market declined. New governments that got created wanted the expectations of their producers to be met by the international market. These demands from various Governments lead to the evolving of the inevitable, FREE TRADE. This policy seemed likely to pander to the expectations of producers from all parts of the World.

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