Getting a Gut Feeling for Comparative Advantage

1930 (adjusting the 1930 prices for general inflation). Use of e-mail and access to the Internet, unheard of in 1930, reduce costs even further. The most important reason that trade has expanded so rapidly, however, is that government restrictions on trade between countries have come down. Western European countries are integrating into a single market. Canada, Mexico, and the United States have agreed to integrate their economies into a free trade area, where the term free indicates the elimination of restrictions on trade. Previously closed economies have opened themselves to world trade through major political and economic reforms. The formerly closed economies in Eastern Europe, the Russian Federation, and, especially, China have joined the world trading system. Export-oriented countries in Asia are growing rapidly, and governments in South America such as Argentina and Chile are opening their economies to competition and foreign trade. These countries are making these changes in an effort to help people. But how do people gain from international trade? Let us now consider that question.