Free Trade Drives International Specialization

Steps:

• Identify the question: Factors encouraging countries to specialize in producing goods where they have comparative advantage.
• Recall trade theory: Specialization occurs when countries focus on efficient production and trade surpluses.
• Evaluate options: Free trade removes barriers, allowing specialization benefits to emerge.
• Confirm: Economic models show free trade maximizes global efficiency through specialization.

Why A is correct:

• Free trade enables countries to specialize according to comparative advantage (Ricardo's theory), where each produces what it does relatively better, increasing overall output.

Why the others are wrong:

• B: Inefficiencies hinder specialization by reducing production advantages.
• C: Labour mobility affects domestic allocation but not international trade specialization.
• D: Tariffs restrict trade, discouraging specialization by protecting inefficient domestic industries.

Final answer: A