ECN 104 Lecture Notes - Lecture 8: Import Quota, North American Free Trade Agreement, Offshore Outsourcing

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Ecn 104 chapter 8 international trade week 6 march 9 th 2016. Comparative advantage and international trade: goods and services purchased from other countries are imports; goods and services sold to other countries are exports, globalization is the phenomenon of growing economic linkages among countries. To understand why international trade occurs and why economists believe it is beneficial to the economy, we will first review the concept of comparative advantage. The following graph illustrates the growing importance of international trade. Figure 8-1: the growing importance of global trade. Panel (a) illustrates the fact that over the past 50 years, canada has exported a growing share of its gdp to other countries and imported a growing share of what it consumes. Panel (b) demonstrates that international trade is more important to some countries than it is to canada. Portugal, and portugal produces wine more efficiently than england, then the countries should specialize, and trade their surplus: david ricardo: comparative advantage.

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