BSB119 Lecture Notes - Lecture 6: Opportunity Cost, Red Tape, Infant Industry Argument
Document Summary
Protectionism : emphasises the importance of government intervention in international trade and investment. To protect national interest by restricting the inflow and influence of foreign goods and businesses. Free trade: emphasises the absence of barriers to the free flow of goods and services between countries. Trade promotes efficiency, competition and creates economic growth and national wealth. Mercantilism: a country should maximise exports and minimise imports (to conserve national wealth) Dominant practice in europe during 16th to 18th century. Absolute advantage: a country should export goods it can more efficiently produce and trade them for imports that can be more efficiently produced by other countries. Comparative advantage: trade should still occur even if a country can efficiently produce everything (a country should produce and export only those goods that it is. Theoretically, free trade brings economic gains by cutting tariffs and other trade barriers (adam smith; david ricardo; etc. )
