Write a 300 word essay on the following topic:

Present a written argument to answer the following question:

Do you agree that free trade makes rich countries richer and poor countries poorer?
Use some trade theories to support your argument.

In the modern world, countries tend to pursue an open economy to gain from trade. This
constitutes the term “free trade”, which means there should be no restrictions on imports
or exports. Indeed, free trade brings both advantages and disadvantages to these nations
in various way. However, based on neo-Marxists’ opinion on free trade, I believe that
free trade would widen the gap between LDCs and MDCs.

Firstly, the nature of exports and imports of LDCs and MDCs are opposite. Specifically,
the difference in terms of trade (ToT) between LDCs and MDCs leads to the economic
gap in case that free trade occurs. Terms of trade are the ratio of the unit price of export
to the unit price of import and the rise in the index implies that a given volume of exports
is exchanged for a larger volume of imports. Developed countries usually have ToT more
than 1, so they gain from trade, whereas LDCs tend to have ToT less than 1, meaning that
they loss from trade. The reason for the difference is that LDCs usually import finished
products, which will have higher price, but export primary commodities.

Secondly, free trade takes place at the expense of the LDCs, producing the condition of
underdevelopment and poverty in LDCs. They are facing several challenges due to its
low technology and unquality infrastructure, leading them to be unable to produce high
technology products to consume or export but import such commodities from MDCs,
which have high price for domestic consumers in LDCs. Moreover, they mainly export
primary goods such as raw materials or agricultural products. Therefore, the imports and
exports of LDCs not only bring difficulties to the citizens to consume intermediate or
manufactured products but also make the nation be poorer in comparison to MDCs under
free trade situation.

In conclusion, free trade is helpful for MDCs as they have beneficial conditions to gain
from trade, whereas LDCs loss from trade due to its poor conditons. Hence, free trade
make the gap between MDCs and LDCs larger gradually.