Economic theories suggest that free trade and investment is a positive

QUESTION

Economic theories suggest that free trade and investment is a positive-sum game, in which all participating countries stand to gain.

Indicate whether the statement is true or false.

ANSWER

TRUE
Economic theories of international trade predict that unrestricted free trade will allow countries to specialize in the production of goods and services that they can produce most efficiently. The result is greater world production than would be possible with trade restrictions. Opening a country to free trade stimulates economic growth, which creates dynamic gains from trade. Foreign direct investment (FDI) can transfer technological, marketing, and managerial know-how to host nations. Thus economic theories suggest that free trade and investment is a positive-sum game, in which all participating countries stand to gain.