Beyond the agreements 5. Developing countries 6. The data show a definite statistical link between freer trade and economic growth. Economic theory points to strong reasons for the link. Economics tells us that we can benefit when these goods and services are traded.
Firms do exactly that quite naturally on the domestic market.
But success in trade is not static. The ability to compete well in particular products can shift from company to company when the market changes or new technologies make cheaper and better products possible. Experience shows that competitiveness can also shift between whole countries. A country that may have enjoyed an advantage because of lower labour costs or because it had good supplies of some natural resources, could also become uncompetitive in some goods or services as its economy develops. However, with the stimulus of an open economy, the country can move on to become competitive in some other goods or services.