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chap03 - International Trade the World Economy Charles van...

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Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and gains from trade Application: Kenya and the EU More countries and world ppf The Balassa index II Conclusions CHAPTER 3; COMPARATIVE ADVANTAGE International Trade & the World Economy; Charles van Marrewijk
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Explanations for trade Classical 2. Opportunity costs 3. Comparative advantage Neo-classical 4. Production structure 5. Factor prices 6. Production volume 7. Factor abundance New trade 9. Imperfect competition 10. Intra-industry trade Policy 8. Trade policy 11. Strategic trade policy 12. Int. trade organizations 13. Economic integration 17. Applied trade policy modeling Economic geography New interactions 14. Geographical economics 15. Multinationals 16. New goods, growth, and development Industrial organization International business Growth theory Part I Part II Part III Part IV 18. Concluding remarks 1. The world economy
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Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and gains from trade Application: Kenya and the EU More countries and world ppf The Balassa index II Conclusions CHAPTER 3; COMPARATIVE ADVANTAGE International Trade & the World Economy; Charles van Marrewijk
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Introduction International Trade & the World Economy; Charles van Marrewijk Objectives / key terms Comparative advantage Production possibility frontier (ppf) Autarky Terms of trade Gains from trade World ppf David Ricardo (1772-1823)
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Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and gains from trade Application: Kenya and the EU More countries and world ppf The Balassa index II Conclusions CHAPTER 3; COMPARATIVE ADVANTAGE International Trade & the World Economy; Charles van Marrewijk
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Classical economics and comparative advantage International Trade & the World Economy; Charles van Marrewijk One of the few ideas in economics that is true without being obvious According to Paul Samuelson (1915-; Nobel prize 1970) the theory of comparative advantage is Technological differences between nations are the classical driving force behind international trade flows. According to David Ricardo relative or comparative differences are important, not absolute differences. The idea of comparative advantage is often misunderstood, see Paul Krugman (1953-) “ Ricardo’s difficult idea” at http://web.mit.edu/krugman/www
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Introduction Classical economics and comparative advantage Analysis of comparative advantage Production possibility frontier and autarky Terms of trade and gains from trade
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