GMS 724 Lecture Notes - Lecture 3: Neomercantilism, Absolute Advantage, Free Trade
1 Mar 2016
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To explain how free trade improves global efficiency. To explain why a country"s export capabilities are dynamic. To explain the relationship between foreign trade and international factor mobility. What major trade theories do and don"t discuss. Mercantilist: theory proposed that a country should try to achieve a favourable balance of trade (export more than it imports) Neomercantilism: policy seeks a favourable balance of trade, but its purpose is to achieve some social or political objective. Absolute advantage: suggests specialization through free trade because consumers will be better off buying foreign-made products priced more cheaply than domestic ones. Imagine that the best physician in town also happens to be the best medical administrator o o o o o. Gms724 week 3 chapter 5 international trade and factor mobility theory. Countries with large land areas are apt to have varied climates and natural resources. They are generally more self-sufficient that smaller countries.
