Free Trade in South America: A Tale of Two Countries' Economic Growth (or Decline?)

By Stanford, Jane H. | SAM Advanced Management Journal, Winter 2000 | Go to article overview

Free Trade in South America: A Tale of Two Countries' Economic Growth (or Decline?)


Stanford, Jane H., SAM Advanced Management Journal


... you reject abstract theories; abundance, cheapness, concerns you little. You are entirely occupied with the interest of the producer, whom you are anxious to free from foreign competition. In a word you wish to secure the national market to national labor...

Frederic Bastiat, French Economist, 1882, from the "Petition of the Candlemakers"

In the 19th century, Bastiat satirically portrayed France's protectionism of the country's domestic industries. This propensity toward protectionism was staunchly maintained by Frenchmen, she averred, even though foreign goods or services might be obtained at a reduced cost to the very people who vowed exclusion. But Bastiat claims that the French chose an isolationist position when the country could benefit from cheaper production "to encourage labor, to increase the demand for labor" (p. 388). In the satire, France's rationale for this standpoint is that producer and consumer are one and the same; therefore what most benefited the producer would be of most benefit to the consumer.

In depicting the irony he sees in this defense of protectionism, Bastiat uses France's candlemaking industry as the "victim" and the sun as the foreign interloper who is undermining the candlemakers by offering free sunlight. In this treatise, the French economist parodies the contradiction in wanting to protect domestic industry from foreign competition, while, as consumers, wanting to have an abundance of less expensive goods and services:

And does it not argue the greatest inconsistency to check as you do the importation of coal, iron, cheese, and goods of foreign manufacture... while at the same time you freely admit, and without limitation, the light of the sun...? (p. 389)

Does history repeat itself? Or, do we conscientiously take the lessons from the past and apply them to our current situations to avoid the costly mistakes of yore. If this were true in the case of modem trade practices then certainly countries would eschew protectionist doctrines. The parochial petition of the candlemakers would not be echoed anew.

But, unfortunately, history does have a habit of repeating itself. Even in an era of unparalleled trade, the vestiges of the candlemakers are still evident. Their desire to create a healthy economy based on continuous growth and equilibrium in demand and supply -- with domestic producers only -- is still strong over a century later.

Introduction

The globalization of trade continues to accelerate as the new millennium approaches. Follow-the-leader strategies are being widely employed as an increasing number of countries seek ways to hone their competitive skills in the international marketplace and develop strong economic infrastructures within their domestic markets (Fites, 1997; Kennedy, 1996). In most situations, the strategy to emulate has been one predicted upon a free market philosophy (Reinicke, 1997; Thurow, 1992). One common result of this trading frenzy is the development of regional trade pacts between neighboring countries (Scholte, 1997; Ohmae, 1995). In some cases, these regional pacts will set the stage for the concentric enhancement of membership into regional trading blocs (Frankel, 1997).

Countries included in trade accords typically have five dominant characteristics that will permit the free trade principles of comparative advantage and demand/supply to work relatively unfettered (Devereux, 1997; Frankel, 1997; Kennedy & Koehn, 1996; Hodgetts & Luthans, 1994; Naisbitt, 1994). First, businesses are largely profit-making entities owned and managed by the private sector, as opposed to being state-owned or managed. Second, these businesses have a propensity to seek opportunities external to their own domestic markets, as opposed to being confined to national boundaries. Third, direct foreign investment is encouraged by government, as opposed to protectionist policies to limit or exclude foreign investors from domestic markets (Crow, 1992). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Free Trade in South America: A Tale of Two Countries' Economic Growth (or Decline?)
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.