Theory of Comparative Advantage & Free Trade

Theory of Comparative Advantage & Free Trade - IP...

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IP 3/31 Theory of Comparative advantage and free trade Free trade is a component of the theory of comparative advantage Theory: States trade with one another—depend on other states Produce goods you are most efficient in producing Win-win situation. Everyone benefits Jamaica 3 major economic problems 3 rd world state—lack capital Non-mechanized agriculture—use machetes Lack of access to foreign markets Import more than they export Import food—locally produced food are more expensive Different than US agriculture US subsidizes agriculture Puts poor states at a big disadvantage for agriculture Free trade zone: everything that’s produced is imported, and then exported According to Comparative theory, what products/services should Jamaica specialize in? Tourism What is the perspective of the IMF as presented in the video? On the whole, it is true that global living standards have risen However, if we subdivide the world into regions, some areas have seen a dramatic rise in the standard of living while others have not Areas: North America—Good
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