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Lecture 13

Lecture 13.docx

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Political Science
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Lilach Gilady

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Lecture 13 International trade is as old as society The salt trade between 8th and 16th AD Gold for salt The silk road from asia to europe carrying silk and spices In every couples of kilometers there are ekhansf and are buildings used for motels The govt wanted to encourage trade so they built these centres so merchants could rest and eat and they also collected taxes there European powers wanted to go to the sources and origins of asian goods so they began exploring and the European Maritime Explorations were fueled by trade Trade was not really peaceful The Opium Wars between Britain and europe and China In the 19th century the english discovered tea and they developed a liking to tea Britain bought more tea than china bought tweed jackets Britain started to cultivate opium in India they sold tweed to india and india sold opium to china KACHING Chinese became addicted to opium very quickly and soon the deficit was on the chinese Price of silver started to rise the chinese govt started to intervene and banned the trade of opium The B were furious And they decided to bomb china of course After the war B gained control oh Hong Kong and B destroyed palaces and shit Transaction costs cost of trade including transportation but also risks etc There are always direct costs and indirect costs with trade Opp costs amount of some other good that is lost in order to obtain unit of given good Relative prices the price of a good in terms of other goods the barter price Modern theory of trade Adam Smith comes up with a theory of trade the wealth of nations and later we have an improver of smithfs ideas David Ricardo or something Adam Smith just liked to sit and think and the result of that was The Wealth of Nations David read The Wealth of Nations during vacations and decided to improve it Adam Smith came up with the notion of absolute advantage and David came up with comparative advantage
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