Econ 161 - Lecture 3

Econ 161 - Lecture 3 - GlobalIntegrationofLatinAmerica...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: GlobalIntegrationofLatinAmerica Lecture3 c Marc-AndreasMuendler UniversityofCalifornia,SanDiego April5,2011 3.ThePrincipleofComparativeAdvantage Econ161, c M.Muendler TradeTheoryandComparativeAdvantage Whydocountriestrade?Shouldtheytrade? 1.Gainsfromspecialization (differencesintechnologyandresources) 2.Gainsfromeconomiesofscale(differencesinmarketsize) Dependingonthedrivingforcesfortrade,policyprescriptionsdiffer Example. Temporarytraderestrictionstoprotectinfantindustriesmaybejustified iftherearestrongeconomiesofscale. 3.ThePrincipleofComparativeAdvantage Econ161, c M.Muendler ThePrincipleofComparativeAdvantage Everycountryhasagivenamountofresourcestoproducegoods. Towhatgoodsshouldthecountrydevoteitsresources? Example : Californiasworkerscaneithermanufacture100,000computersorgrow 10millionroses,oramixofthetwo. Mexicosworkerscaneithermanufacture30,000computersorgrow9millionroses, oramixofthetwo. Shouldbothcountriesproducebothgoods? Californiaismoreproductiveineverything. Californiais relatively moreproductiveincomputermanufacturing, Mexicois relatively moreproductiveinrosegrowing. 3.ThePrincipleofComparativeAdvantage Econ161, c M.Muendler LatinAmerica:LeadingExportGoods,2008 Percentageofexports Brazil Colombia Ecuador Mexico Crudepetroleum 6.9 24.7 58.1 14.9 Petroleumproducts 4.8 7.3 5.0 2.1 Passengermotorcars 2.5 7.4 Televisionbroadcastreceivers 7.8 Electricaltelephoneequipment 6.0 Soyabeans 5.5 Ironoreandconcentrates 8.4 Crustaceaandmolluscs 3.5 Bananas 1.7 8.7 Coffee,greenorroasted 2.1 5.1 Partsformotorvehicles 4.0 Poultry,killedordressed 3.0 Aircraft,heavier-than-air 2.8 Coal 12.2 Cutflowers 2.9 3.0 Preparedorpreservedfish 4.2 Topfiveexportproducts(topsixforBrazil),additionalproductsifamongtoptenelsewhere. Source :ECLAC, StatisticalYearbook ,2009 3.ThePrincipleofComparativeAdvantage Econ161, c M.Muendler ThePrincipleofComparativeAdvantage...
View Full Document

This note was uploaded on 08/14/2011 for the course ECON 161 taught by Professor Muendler during the Spring '11 term at San Diego.

Page1 / 18

Econ 161 - Lecture 3 - GlobalIntegrationofLatinAmerica...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online