Bilateral Trade Agreements between the EU and the Philippines Essay

Bilateral Trade Agreements between the EU and the Philippines - Essay Example world-wide trade traces its roots from the modern economic concepts popularized by economists such as David Ricardo. Particularly, it has its foundation on the principles of comparative advantage which supports international trade (Mankiw).Introduced by David Ricardo in 1817 through his hold in On the Principles of Political Economy and Taxation, comparative advantage posits that trade can create value for twain countries even if superstar has the fewer resources in the production of all goods. Using the production possibilities frontier, Ricardo was able to conjure this, achieving a significant breakthrough in the field of international economics.Practically, Ricardo believes that given the situation, both countries can nonwithstanding gain by having the less efficient clownish specialize in the production and exportation of the goodness in which its absolute disadvantage is smallest and import the product in which it has its greatest absolute disadvantage. The commodity in which one country has the least absolute disadvantage can be thought of as one in which it has a comparative advantage. ... Therefore, if each economic agent (firm, person, country) does what he, she, it does best, and each trades some of the results for what others do best, then everyone can be better off in terms of the amount of goods and services available to them (Mackintosh). This argument that asserts the gains from trade is not only concerned about international trade it is also an issue of most of the debates in the administration of economic policy. It is an argument for freedom of specialization and trade (Mackintosh). In a high-income and low-income country comparison, the book, Making the International Economic Interdependence and Political Order highlighted that in a two-commodity example of food and pills, specialization entrust benefit both countries as each will be producing the commodit y with the least opportunity cost, exclusively saying that trade can help increase income even for the low-income countries (Mackintosh). In recent years, there is an notice rise in the number of bilateral trade sympathys between countries. Experts say that for a powerful country like the USA, smaller FTAs accomplish the goal of liberalization and the expansion of markets for U.S. goods in the absence of a broader agreement like the capital of Qatar round (MacMahon). On the part of the smaller countries, bilateral trade agreements increase the local anesthetic employment and provide a better climate for investors from powerful nations (MacMahon).A significant general understanding for the rising popularity of bilateral trade agreements is the disenchantment with the progress with liberalization at the multilateral level. The difficulties and failures associated with concluding the Doha round have simply supported this view.