BUS357
Free Trade and Government Regulations
University of Arizona Global Campus
BUS357
International Business
As opposed to Mercantilism or Neomercantalism, Free Trade does not require one country to
benefit over the other. Instead, the concept leaves the path of communication open and allows
both countries to experience a surplus. While free trade does not always cause an excess for both
countries, it is better to have the option - rather than to not.
First, let us define the other two types of trade theories. Mercantilism refers to the old saying, "a
country's wealth is measured by its treasure" (Daniels et al., 2020, pg 158, para 2). In other
words, a country that believes in mercantilism will only want to engage in agreements where
they benefit the most and export more than they import. An example of this would be China.
They are known for not allowing as many imports as they export. Neomercantalism "is the
running of a favorable balance of trade to achieve some social or political objective" (Daniels et
al., 2020, pg 158, para 6).
Anything that is one-sided can not be the best option, especially if it is not the only option.
There are so many reasons why we need trade, "no nation has all the natural resources,
geographic conditions, and technology necessary to produce everything we consume today"
(Daniels et al., 2020, pg 158, para 7). The natural advantage is based on geography, natural
resources,, and access to specific labor jobs (Daniels et al.,
2020). Examples of natural advantages are usually exotic fruits and vegetables.
Acquired advantage refers to manufactured goods that compete through technology. "A
