COMMERCE 4SA3 Chapter Notes - Chapter 5: Win-Win Game, New Trade Theory, Absolute Advantage
27 Nov 2018
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Document Summary
Free trade: a situation where a govt does not attempt to influence (quotas and duties) what its citizens can buy from other countries and what they can produce and sell to another. International trade allows a country to specialized in the manufacture and export of products that can be produced more efficiently in that countries, while importing produced that can be produced most efficiently in other countries. Argument for unrestricted trade is that both import controls an export incentives are self defeating and result in wasted resources (comp advantage, hecksher-ohlin thoeries argue for unrestricted trade). New trade and porter justify a limited govt intervention to support the dev of certain export-oriented industries. Mercantilism: (16th century) gold and silver mainstays og national wealth and essential to vigorous commerce. In a country"s best interest to maintain trade surplus, to export more than it imported. Thus it would accumulate gold and increase national wealth.
