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Chapter 3 Why Everybody Trades: Comparative Advantage Prologue: Mercantilism Episode I. Adam Smith and Absolute Advantage Episode II. David Ricardo and Comparative Advantage Prologue: Mercantilism Prologue: Mercantilism The central Belief of Mercantilism: National well-being or wealth was based on national holdings of gold and silver (specie or bullion), so exports were viewed as good and imports (except for raw materials not produced at home) were seem as bad. Mercantilism viewed trade as a zero-sum activity—one country’s gains come at the expense of some other countries. On Mercantilism Main ideas: 1.Only gold or silver are national wealth. 2. Trade is the only way to accumulate national wealth. 3. Export is viewed as good because of getting gold or silver, import is seen as bad. 4.Government encourage exports and limit imports. Theory of Absolute Cost It is a theoretical explanation to the cause of international trade. Introduced by Adam Smith in his “ Wealth of Nations”. 1902年由严复首次翻译为《原富》,使其传入中国,为介绍新思想而译。1930年,王亚南、郭大力的译本初为《国富论》,后名《国民财富的性质和原因的研究》(1972年),“只是要作为翻译资本论的准备,为宣传马克思主义政治经济学做准备”而译的。 Adam Smith and Absolute Advantage Adam Smith and Absolute Advantage Model: Two-Country Two-product Two countries: Two products: One Resource: Labor Assumption——Welfare Graph of Absolute Advantage On Absolute Advantage 自然优势:自然地理、气候条件等方面的优越性,普通人力无法控制。如美国、法国、波兰的大平原上,土壤条件好,粮食生产效率高,单位粮食产品所消耗的绝对劳动时间就少,其小麦生产就具有绝对成本优势。相反,地处非洲的情况就不一样了。 获得性优势:某国掌握的特殊商品的生产技术和技能。技术熟练、技术水平高,生产效率就高,单位产品生产的绝对劳动时间消耗就少。如英国工业革命先进的纺织技术和冶炼技术。 Adam Smith and Absolute Advantage The benefits of free trade: Global production efficiency is enhanced because trade allows each country to exploit its absolute advantage in producing some products. Trade is a positive-sum activity. Raise questions: 1. Could countries have trade if without absolute differences in cost? 2. Is it possible for the richest country to t
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