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Globalisering och utveckling Karlstad Universitet, HT2010 F2: Smith and Ricardo

This article explores the theories behind why countries trade with each other and the effects of restrictions on international trade. It discusses the concepts of absolute advantage, comparative advantage, and opportunity costs in trade.

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Globalisering och utveckling Karlstad Universitet, HT2010 F2: Smith and Ricardo

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  1. Globalisering och utvecklingKarlstad Universitet, HT2010F2: Smith and Ricardo Per-Åke Andersson 031-786 1353 per-ake.andersson@economics.gu.se

  2. ”Traditionella” handelsteorier Teorier kring varför länder handlar med varandra och konsekvenserna av restriktioner på internationell handel utgör ett av de äldsta områdena inom nationalekonomi: • Adam Smith och absoluta fördelar (1776) • David Ricardo och komparativa fördelar (1817) • Heckscher-Ohlin (1933 & 1949)

  3. SINDIA SUS Price of Cloth Price of Cloth E PUS Exports p* p* c b d a Imports PINDIA F DUS DINDIA Q1 QUS Q2 Q3 QINDIA Q4 Quantity of Cloth Quantity of Cloth U.S. Cloth Market India’s Cloth Market TRADE IN AN INDIVIDUAL PRODUCT Figure 2.1 The Effects of Trade on Production, Consumption, and Price of Cloth

  4. International Price of Cloth SW G p* DW QW International Quantity of Cloth International Market for Cloth TRADE IN AN INDIVIDUAL PRODUCT Figure 2.1 The Effects of Trade on Production, Consumption, and Price of Cloth

  5. TRADE BASED ON ABSOLUTE ADVANTAGE • Consider the example again involving the U.S. and India • Only two products are produced, machines and cloth • Labor is fixed, homogeneous within a country, the only factor of production, and is fully utilized • Technology and production costs are constant • Transportation costs are zero and the countries barter for goods

  6. TRADE BASED ON ABSOLUTE ADVANTAGE Table 2.1 Absolute Advantage: Production Conditions When Each Country Is More Efficient in the Production of One Commodity

  7. TRADE BASED ON ABSOLUTE ADVANTAGE Table 2.2 Change in World Output Resulting from Specialization According to Absolute Advantage

  8. Smith, modell Åtgången av arbetskraft, mätt i timmar per varuenhet, kan beskrivas av följande tabell

  9. Smith, produktionsmöjlighetskurva industri industri Mexiko USA 50 50 25 25 25 50 25 50 jordbruk jordbruk

  10. Smith, modell • Efterfrågan: Anta att båda länderna konsumerar lika mycket industri- som jordbruksprodukter. • Ingen handel (för given efterfrågan): • Båda länderna producerar 12,5 industrivaror och 12,5 jordbruksprodukter. • OBS För att kunna producera efterfrågad kvantitet krävs att de 100 timmarna i respektive land delad upp enligt:

  11. Smith, ny konsumtionsmöjlighetskurva industri industri Mexiko USA 50 50 25 25 25 50 25 50 jordbruk jordbruk

  12. Slutsats, Smith, absoluta fördelar • Specialisering och handel möjliggör att båda länderna kan förflytta sig utanför den tidigare resurs- och produktivitetsbegränsningen, vilket leder till ökad konsumtion.

  13. Ricardo, komparativa fördelar • Vad händer om ett land har absoluta fördelar i produktion av alla varor? • Enligt Smiths teori => ingen handel. • David Ricardo visade 1817 att det räcker med relativa (komparativa) fördelar för att handel ska bli intressant.

  14. TRADE BASED ON COMPARATIVE ADVANTAGE Table 2.3 Comparative Advantage: Production Conditions When the U.S. Is More Efficient in the Production of Both Commodities

  15. TRADE BASED ON COMPARATIVE ADVANTAGE Table 2.4Change in World Output Resulting from Specialization According to Comparative Advantage

  16. TRADE BASED ON OPPORTUNITY COSTS Table 2.6 Production and Consumption With and Without Trade: Based on an Exchange Rate of 1 Machine = 4 yds. of Cloth

  17. THE PRODUCTION POSSIBILITIES FRONTIER AND CONSTANT COSTS Table 3.2 Production Possibilities Schedules for the U.S. and India at Full Employment

  18. Cloth Cloth INDIA U.S. 300 300 C C’ MRT = –3 A 150 A’ 100 B MRT = –5 B’ Machines Machines 0 50 100 0 40 60 THE PRODUCTION POSSIBILITIES FRONTIER AND CONSTANT COSTS Figure 3.1 Production Possibilities Frontiers Under Constant Costs for the U.S. and India

  19. Cloth Cloth U.S. India D’ 300 300 E Exports 200 A 150 A’ E’ 100 Imports Imports Exports D Machines Machines 0 40 50 60 0 50 100 THE PRODUCTION POSSIBILITIES FRONTIER AND CONSTANT COSTS Figure 3.2 Specialization and Trade Under Constant Costs

  20. THE TERMS OF TRADE Table 3.4 Production and Consumption With and Without Trade: Based on an Exchange Rate of 1 Machine = 3.5 yds. of Cloth

  21. Cloth Cloth U.S. India D’ 300 300 E 200 175 F F’ 150 125 A A’ E’ 100 D Machines Machines 0 40 50 60 0 50 100 THE TERMS OF TRADE Figure 3.4 Changes in Terms of Trade for the U.S. and India

  22. Ricardo, summering • Handelsmönstret bestäms av komparativa fördelar. • Handel leder till fullständig specialisering. • Samma relativpriser i båda länderna. • Båda länderna tjänar på handel. • Vilket land tjänar mest? Kolla relativpriserna!!

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