MARK 462 Lecture Notes - Lecture 6: International Trade, Ethnocentrism, Paul Samuelson

• School: Concordia University
• Department: Marketing
• Course: MARK 462
• Professor: Marie- Jos�e Errunza

Document Summary

I(cid:374)ter(cid:374)atio(cid:374)al trade : why do countries trade with each other, build strong ties, save costs, attract investors, what would happen is countries did not trade with each other, suffer from economic losses (i. e resources, suffer shortage, create tension. What role does government have in trade: the mercantilist philosophy makes a crude case for government involvement in promoting exports and limiting imports. How does the theory of absolute advantage work: assume that two countries, ghana and south korea, both have 200 units of recourse that could either be used to produce cocoa or rice. If each country specializes in the production of the good in which it has an absolute advantage and trades for the other, both countries gain (trade is a positive sum game) How does the theory of comparative advantage work: assume ghana is more efficient in the production of both cocoa and rice. Import goods that make intensive use of factors that are locally scarce.