Flashcards
UNA Econ
Cards in this deck (4)
- 1Gains from trade (Why is globalization good?)- Absolute advantages: Trading things we don't have, can't get or would cost us a lot to produce
- Comparative advantages (Ricardo): Specializing in dissimilar goods (different countries have different strength) > Leads to costs reduction
- Trade in similar goods: Large variety at a lower cost because of higher specialization
- Slicing the value chain: As costs of coordination fall the process of production (Production > Assembly > Marketing > Distribution) can be broken up between different countries, opposite of pre-compuer age
- Foreign competition: International competition keeps firms on their toes because of higher competition
= International trade should be understood as an exchange characterized by a win-win situation, in contrast to conflicts where one country gets the upper hand. - 2Downside of Trade- Alexander Hamilton: Infant Industries need more time to produce as efficiently as established producers
- Implicit national defense argument: governments can pick winners from losers through industrial policy
- Restricting imports seen as method of exporting unemployment problem. - 3ProtectionismMeant to prevent pain to domestic interests, e.g. employment loss.
Forms:
- Tariff (taxing import), Subsidies (supporting local industry)
- Quotas: need to buy license to import.
- Voluntary export agreements (or self-imposed quotas). For example: japanese cars
- Non tariff barriers
Effect: Implicit or explicit subsidy to domestic producers who can get away with charging higher prices - 4—
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- UNA B Economics Flashcards on UNA Econ, created by Marie Katharina on 05/10/2015.
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- Marie Katharina
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