国经CH02.ppt

TRADE AND TECHNOLOGY: THE RICARDIAN MODEL Homework Chapter 2, question 2,3,4,5,7,11 Introduction Why does the U.S. import goods that it could easily produce itself with its great manufacturing capability? The first part of this book looks at the various reasons for trade: Technological differences Differences in amounts of resources Differences in costs of outsourcing The proximity of countries to each other Reasons for Trade Reasons for Trade Proximity (Canada) The closer countries are the lower the costs of transportation. For example, the largest trading partner of most European countries is another European country. Proximity often leads to countries joining into a free trade area. Reasons for Trade Resources (Canada, Austria ) A country can have resources that give it an edge in the production of certain goods. A country with a lot of snow may be very good at producing snowboards. Geography includes natural resources (including land and minerals), labor resources, and capital. Resources are also called factors of production—the land, labor, and capital used to produce goods and services. Reasons for Trade Resources (Mexico and Taiwan ) Some countries produce unfinished products that are then processed in another country. Unfinished snowboards produced in Mexico and Taiwan Trade in unfinished goods is an example of outsourcing—when production activities are spread across several countries and trade semi-finished products between them. Reasons for Trade Absolute Advantage (Germany) When a country has the best technology for producing a good, it has an absolute advantage in the production of that good. Germany has an absolute advantage in the production of snowboards. Why is it that so many are imported from China then? Or why doesn’t the U.S. just make all its own snowboards? Reasons for Trade Comparative Advantage (China) Absolute advantage is actually not a good explanation for trade patterns. Comparative advantage is the primary explanation for trade among cou