IB 3101 Lecture Notes - Lecture 5: Paul Krugman, North American Free Trade Agreement, Wassily Leontief
19 Mar 2017
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Week 5- chapter 5 international trade theory. Part 1- older versions of trade theories (16th ce 1950s: no gov(cid:495)t intervention in what citizens can buy / sell from other countries, no quotas, tariffs, subsidies. Trade theories: do it even if you can produce on your own, allows you to specialize in exporting products efficiently. Import products are produced efficiently by other countries. The pattern of international trade: refers to which countries produce which goods. Gains from international trade usually come from two sources: Greater production efficiency due to division of labor (specialization) The ability to exchange goods with trade partners who specialize in things we make less efficiency. It may seem counterintuitive, but the main gains from trade arise from. Most people don(cid:495)t understand this, and most governments behave as though the goal of trade were to export. Mercantilism: maintain trade surplus, maximize export through subsidies, minimize imports through tariffs and quotes, export > import.
