POLSCI 2XX3 Lecture Notes - Lecture 2: Pierre Pettigrew, Comparative Advantage, Capital Good
11 Oct 2016
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Unit 1: introduction to development studies part 2. Theories of vicious circles of poverty: people are underdeveloped because they are poor; people are poor because they are underdeveloped. Theories of the stages of economic growth. Every country will benefit if they engage in dynamic trade with each other. Trade was/is conceived as the solution to eliminating poverty. Ricardo said it is economically irrational for england and portugal to produce the same thing (textiles) because england has the comparative advantage but portugal has the comparative advantage to produce wine (because of its climate and landscape) Polsci 2xx3 fall 2015: therefore, england should produce textiles while portugal should produce wine rather than both countries producing the same things at the same time. Example: mexico has comparative advantage when it comes to human labour; people would rather work for little wage than nothing.
