Immediately after World War II, it was generally believed that the lack of free trade was harmful and caused economic recessions and even depressions, most notably the Great Depression of 1930, which was vividly then, in the living memory of governments and societies. These ideas were further supported by the founding of the EEC in 1957 and then by the creation of the WTO in 1995. Adam Smith and David Ricardo also strongly believed in free trade. However, today, in our globalized and interconnected world, is free trade our enemy or an open door to prosperity and innovation? Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original EssayFree trade is the absence of barriers to the import or export of goods and services between countries. In the case of developing economies, assuming ceteris paribus, this would give palm oil producers in Malaysia (GDP $315 billion), for example, the same opportunity as producers in the Netherlands (GDP $826 billion), meaning that there would be an equal chance of palm oil from both countries being sold on the global market. This then benefits Malaysia resulting in an increase in its GDP, aiding its development, improving the lives of Malaysians, as there would be greater value to be injected into its economy through increased exports. However, without free trade, there would be import duties, which would make Malaysian palm oil less competitive, thus leading to a lower value of injections than in the previous scenario, which would have a less positive impact on its economy and development . An example of this is India which increased the import tax on refined palm oil to 54%. However, some tariffs specifically target a country rather than a product, which would make the particular export very uncompetitive in the importing country. Managed trade, trade barriers and embargoes largely affect developing countries, as their main exports are primary goods, which are generally cheaper and more volatile in price than manufactured goods or services. they are usually exported from high-income countries. This means that per unit sold of each good, developing nations receive less revenue, underscoring the importance of free trade for these economies to maximize exports. This highlights the inequalities in the global economy, where supreme nations are able to manipulate global trade, subsequently but unintentionally influencing the growth of smaller economies, which demonstrates how free trade can be beneficial to developing countries and combating the imbalance of economic and political power around the world. The WTO and the Fairtrade Foundation deny and reinforce the importance of free trade for low-income countries. Because trade is a “two-way trade,” free trade has a further positive impact on developing countries by allowing them to import needed capital goods at a lower price to be able to shift their PPF outward in the future , which is essential for the growth and development of an economy. Furthermore, free trade has a positive impact on developed economies, as it allows for the improvement of economic relations. Australia (GDP $1.32 trillion) has 11 free trade agreements that “benefit Australian importers, exporters, manufacturers and investors by reducing and eliminating certain barriers to international trade and investment,” as revealed by its government. The result is the economic growth it has.