POLI 243 Lecture 11: POLI243 Lecture 11
26 May 2016
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Comparative advantage: an actor"s ability to produce a good or service more ef;iciently than another actor"s ability to do so. It is much more ef;icient especially for trade. As a result, people are specialized on the goods and services that can do ef;iciently. Domestic economy works like this but we want to see how this impacts the international level and how international politics affects choices impacting comparative advantage and trade. Ricardo: turned smith"s example into a story about international examples. Imagine each country in isolation (country a and. Country a can produce two goods (x and y) Transfer of resources that"s going to take place when producing one or the other. There is a sense of supply that varies from one country to the other which shows up in price. Countries have different abilities to produce these two goods. Country a should focus on what they can produce cheaply, and country b should focus on what they can produce cheap.
