1130200166FreeTradePAGE\*MERGEFORMAT5CountriesShouldPracticeFreeTradeCynthiaZhang1130200166PlymouthDecember10,2012Businessmengainmoneybytradingwithothers,andcountriesconductdifferenttradepoliciestogainprofitsfortheirdomesticeconomies.Somecountriescarryoutafreetradepolicy,whichallowgoodsallovertheworldtoexportandimportfreely.Therearealsosomecountriesthatattempttoimprovedomesticeconomiesbyrestrictingforeigngoodsfromimportinginthecountry,whichiscalledinward-orientedpolicy.However,Mankiw(2012)claimedthateconomiesthatpursuedfreetradepoliciesenjoyedhighratesofeconomygrowthwhileinward-orientedpolicyeconomiesgotworse.Countries’policymakersshouldcarryoutfreetradepolicytoimprovethedevelopmentofeconomies.Freetradecanbenefitacountry’seconomybothinincreasinglivingstandardandproductivity.Oneofthebenefitsofconductingfreetradeisthatacountrycanraiseresidents’livingstandardbyeliminatingtraderestrictions.Economistsmeasurethelivingstandardwiththeamountofgoodsandservicethatpeopleconsumeinacounty.Inafreetradecountry,peoplecaneasilyenjoynotonlyagreatnumberofavailablegoods,butalsothegoodswithhighqualityandadvancedtechnique.Forinstance,Thomas(2006)revealedthatAmerica,whichisoneofthemostdevelopedcountry,haveexperiencedrapidimprovementinlivingstandardsinceconductedfreetrade.Insteadofhavingtoproduceallthecapitalgoodsandconsuminggoodsitself,Americameetstheconsumptiondemandinthecountrybyimportingenoughgoods.Mankiw(2012)allegedthatfreetradecountriesincreasethedomesticpurchasingpowerandlivingstandardbyfreetrade.Policymakersineachcountryshouldconsidertotaketheadvantagesoffreetreedtoimprovethedomesticlivingstandard.Besidesprovidinghigherqualityoflivingstandard,freetradealsoraisestheproductivityofacountrybymakingeachcountryproducegoodswithcomparativeadvantages.Thefirstreasonwhyfreetradeisgoodforimprovingproductivityisrelatedtocooperation.Forexample,ChinaisgoodatfarmingandJapanisskilledintechnology.Byinternationaltrade,Chinacanenjoytheexchangeoffoodsforadvancedtechniquewi