BU205 Lecture Notes - Lecture 16: Silicon-Germanium, Comparative Advantage, Absolute Advantage
Document Summary
Summarize the different theories explaining trade flows between nations. Absolute advantage by adam smith: countries should differ in their ability to produce goods efficiently. A country should specialize in producing goods in areas where it has an absolute advantage and import goods in areas where other countries have absolute advantages. (lowest labor to produce most) Landet handler med de varer, hvor det har absolutte fordele i forhold til dets samhandelslande. Dette ger produktionen og samhandlen, hvilket skaber velstand. Unrestricted free trade brings about increase world production , that is, that trade is a positive-sum game. Opening a country to free trade stimulates economic growth, which creates dynamic gains from trade. Landet skal handle pa omra der, hvor det har komparative (relative) fordele i produktionen. Landet skal specialiserer sig i de varer, hvor landet er bedst udrustet af en faktor som f. eks. arbejdskraft, ra varer.
