IB 201 Lecture Notes - Lecture 1: New Trade Theory, Infant Industry Argument, Tariff
15 Nov 2016
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Document Summary
International trade is the purchase, sale, or exchange of goods and services across national borders. Most trade in the world takes place between high income countries. Interdependency developed nations trade with other developed nations. Dependency developing nation and a developed neighboring wealthy nation. Mercantilism the trade theory that nations should accumulate financial wealth, usually in the form of gold, by encouraging exports and discouraging imports trade generates wealth. Trade surplus the condition that results when the value of a nation"s exports is greater than the value of its imports. In mercantilism, a trade surplus means that a country takes in more gold on the sale of its exports than it pays out for its imports. Flaw of mercantilism is zero sum game the idea that a nation benefits from trade only at the expense of other nations. Absolute advantage ability of a nation to produce a good more efficiently than any other nation.
