IGS 10a Lecture Notes - Lecture 15: Free-Trade Zone, Sweatshop, General Agreement On Tariffs And Trade
4 Nov 2016
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Document Summary
Economies specialize in what they do best (comparative advantage) Developing countries export agricultural/labor intensive manufacturing and developed countries export services/skill intensive. Land, labor, and capital (factors of production) put to most productive uses as a result of specialization. Consumers gain from lower prices due to competition. People"s skills not matched to demand -> job loss and struggle to find new. Increased consumption-> factory closures work/decreased gains (decrease in wages/conditions) Closer contact today with developed and developing countries. Regulatory standards: laws/policies to protect health and welfare of citizens-> governments set up their own standards by themselves but choices can have global impact. Weak standards can be seen as unfair advantage for exporting countries and strong standards can be pretext for restricting imports. Us and mexico recognize nafta (1992) to: Decreases pay and benefits because companies want to spend the least amount of money on their goods. Claim: investment and jobs will flee us = sweatshop effect and pollution haven .
