GMS 724 Chapter Notes - Chapter 5: Comparative Advantage, Factor Endowment, Statics

• School: Ryerson University
• Department: Global Management Studies
• Course: GMS 724
• Professor: Lori Anne Heckbert

Document Summary

Interventionist theories of treasure, which usually means its gold. Neomercantilism: the approach a country takes when it tries to run an export surplus (favourable balance of trade) in an attempt to achieve some social or political objective. Both theories hold that nations should neither artificially limit imports nor promote exports: the market will determine which producers survive as consumers buy those products that best serve their needs. Labour could become more skilled by repeating the same tasks. Labour wouldn"t lose time in switching production from one product to another. Both theories assume that resources are fully employed. Countries also pursue objectives other than output efficiency. Countries may avoid overspecialization because of the vulnerability created by changes in technology and price fluctuations. If a country perceives that a trading partner is gaining too large a share of benefits, they may prefer to forgo absolute gains for themselves so as to prevent other from gaining a relative economic advantage.