Final answer:
It is false that free trade is only beneficial if a country is more productive overall, as gains from trade come from specializing in one's comparative advantage, allowing for mutually beneficial trade even when one country has an absolute advantage in producing all goods.
Step-by-step explanation:
The statement that free trade is beneficial only if a country is more productive than another and strong enough to stand up to competition is false. International trade theory, particularly David Ricardo's principle of comparative advantage, explains that even if one country has an absolute advantage in producing all goods more efficiently than another country, there can still be mutual benefits from trade.
The key is for countries to specialize in producing the goods for which they have a comparative advantage—that is, where their efficiency disadvantage is the smallest, or efficiency advantage is the greatest—even if they are not absolutely more efficient across the board.
This is because trade allows for a greater specialization and can lead to an overall increase in production efficiency and welfare for both countries involved.
Therefore, gains from trade are not only about being more productive but also about capitalizing on the differences in productivity between goods within a country and then trading to maximize the benefits.