ECON216 Lecture Notes - Lecture 4: Economic Equilibrium, Endogenous Growth Theory, Barter
Document Summary
Importance of trade to development: traditional trade: : if each nation specializes in their comparative advantage good, world output increases and both nations gain, developing nations should continue to produce primary goods while developed nations produce manufactured goods. > in the long run this pattern keeps them from reaping dynamic benefits of industry and - maximizing their welfare. Full utilization, divi of labour, eco of scale, improved resource allocation efficiency, transfer of skills, know, tech, int cap flow from developed- developing, domestic demand for new manu products, greater efficiency to meet fore competition. Lowering trade barrier -> speed up eco growth and development in the long run by. Absorb tech faster, benefits from r&d, larger eoc, reduce price distortions -> more efficient use of domestic resources, greater spe & more efficiency in intermediate inputs production, more rapid intro of new g&s.
