GMS 522 Chapter Notes - Chapter 2: International Monetary Fund, World Trade Organization, Federal Direct Student Loan Program
15 Oct 2012
School
Department
Course
Professor
Document Summary
Trade allows nations to specialize in the areas of economic activity they are best suited to. United states and eu implemented protectionist policies. Trade helps increasing domestic production and productivity, allows a use of resources more efficient, a source of tax revenue, more product available for the consumer. Mercantilism : manufacturing sector, agricultural sector and foreign colonies. Population growth a good think to keep wage down. Trade of balance: difference between export and import. Adam smith showed that the country should specialize in the production of what it could produce more efficiently than its prospective trading partner should produce products in which they have an absolute advantage. Product cycle theory: new and innovation, maturity of product. Mass production technique: standardize product stage. Low cost labor that takes place in developing countries. Krugman"s model: monopolistic competition and economy of scale. Protectionism: measures adopted by national governments to unduly restrict trade and foreign investment.
