Free trade refers to a situation where a government doesn't attempt to influence through quotas or duties what its citizen can buy from another country, or what they can produce and sell to another country. The benefits of trade The great strength of the theories of Smith, Ricardo, and HnO is that they identify with precision the specific benefits of international trade. Iceland can benefit from trade by exchanging some of the product that it …showed first 75 words of 2300 total…

…showed last 75 words of 2300 total…govt intervention. By the sophisticated and judicious use of subsidies, could a govt increase the chances of its domestic firms becoming first movers in newly emerging industries, as the US govt apparently did with boeing? If this possible, and the new trade theory suggests it might be, then we have economic rationale for a proactive trade policy that is at variance with the free trade prescriptions of the trade theories we have received so far.