a) Select 2 BRICS countries and list 2 sources of comparative advantages for each.

b) How could US firms compete with firms from these countries given the advantages you listed?

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Joshua StredderLv10

28 Sep 2019

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A political commentator makes the following statement: âThe idea that international trade should be based on comparative advantage of each country is fine for rich countries like the United States and Germany. Rich countries have educated workers and large quantities of machinery and equipment. These advantages allow them to produce every product more efficiently than poor countries can. Poor countries like Benin and Bolivia have nothing to gain from international trade based on comparative advantage.â Discuss this view.

1 The infant industry argument is that:

a.protectionism promotes complete specialization in the country on the basis of comparative advantage.

b.new industries should be protected from foreign competition until they have had adequate time to develop.

c.protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.

d.developing industries should be allowed to face foreign competition.

e.those industries that produce products for infants should be protected.

2. One of the primary objectives of the WTO is:

a. to enable western countries to emerge as major players in international trade.

b. to redistribute wealth from the first world to the third world countries.

c. to create trade restrictions across the countries.

d. to enable certain countries to maintain their autarkic conditions.

e. to reduce trade barriers created by the different countries.

blushsardine470

In the first chapter, we learned about the concept of specialization and comparative advantage. By learning these concepts, we tend to agree that specialization along the lines of comparative advantage and then the trade is beneficial. As Adam Smith stated in his book, The Wealth of Nations, he said that no "prudent master [will] make at home what it will cost him more to make than buy."

Now, consider the outsourcing scenario, where American firms have foreign firms/countries produce certain goods or services for them instead of producing them in the US.

Issues to discuss:

In your opinion, does outsourcing create problems for the US economy?

In your opinion, should we restrict trade with foreign firms/countries who produced these goods and services?

Keep in mind that there is no right or wrong answer for these types of questions. Just make sure you provide explanations/facts/data to back up your opinion.