Adam Smith first proposed that absolute advantage in production provides the basis for mutually beneficial trade. David Ricardo later refined this to show that comparative advantage, not absolute advantage, is the key - a country should specialize in what it can produce relatively more efficiently. Empirical studies have supported Ricardo's theory, finding nations export more of goods where they have lower relative production costs. While useful, Ricardo's model does not fully explain differences in productivity or trade's impact on factor incomes.
In this presentation, we will discuss about how or what conditions trigger international trade, which are further elaborated through various theories of international trade.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
In this presentation, we will discuss about how or what conditions trigger international trade, which are further elaborated through various theories of international trade.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit: http://www.welingkaronline.org/distance-learning/online-mba.html
This is a ppt which explains the economic concept gains from trade. It can also be used to explain biography of adam smith and david ricardo. both were great economists.
This is the first of a 12 module series on the law and policy of the global trading system being offered as part of UPH's WTO Chairs Program.
This module focuses on globalization, the theories of absolute and comparative advantage, the gains from trade, and restates three simple principles of trade policy.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
This is a ppt which explains the economic concept gains from trade. It can also be used to explain biography of adam smith and david ricardo. both were great economists.
This is the first of a 12 module series on the law and policy of the global trading system being offered as part of UPH's WTO Chairs Program.
This module focuses on globalization, the theories of absolute and comparative advantage, the gains from trade, and restates three simple principles of trade policy.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
2. 2.1 Introduction
Historical Approach to Examine the
Development of International Trade
Theory (Mercantilism, Absolute
Advantage, Comparative Advantage)
Three Basic Questions
Basis for Trade
Gains from Trade
Patterns of Trade
3. 2.3 Trade Based on Absolute
Advantage: Adam Smith
Absolute Advantage
Illustration of Absolute Advantage
Main Views on Trade
Comments
Conclusion
4. Absolute Advantage
Adam Smith(1723-90)
Absolute advantage theory was proposed by Adam
Smith (1723-90) . With The Wealth of Nations Adam
Smith installed himself as the fountainhead of
contemporary economic thought . Adam Smith was born
in a small village in Kirkcaldy, Scotland. There his
widowed mother raised him until he entered the University of Glasgow at
age fourteen, as was the usual practice, on scholarship. He later
attended Balliol College at Oxford, graduating with an extensive
knowledge of European literature and an enduring contempt for English
schools. He returned home, and after delivering a series of well-received
lectures, was made first chair of logic (1751), then chair of moral
philosophy (1752), at Glasgow University.
5. Absolute Advantage
Introduction
Adam Smith coined (创新) the term "mercantile system" to describe the
system of political economy that sought to enrich the country by
restraining imports and encouraging exports. This system dominated
western European economic thought and policies from the sixteenth to the
late eighteenth century. The goal of these policies was, supposedly, to
achieve a "favorable" balance of trade that would bring gold and silver into
the country. In contrast to the agricultural system of the physiocrats(自然
拥护者), or the laissez-faire of the nineteenth and early twentieth centuries,
the mercantile system served the interests of merchants and producers
such as the British East India Company, whose activities were protected
or encouraged by the state.
6. Illustration of Absolute Advantage
No Trade
U.S. U.K.
Wheat (bushels/man-hour) 6 1
Cloth (yards/man-hour) 4 5
With Trade
U.S. U.K.
Wheat (bushels/man-hour) 12 0
Cloth (yards/man-hour) 0 10
After Trade
Output wheat increases 5 units(12-7,before trade)
Output cloth increases 1 unit (10-9, before trade);
The world output increases 5 units wheat and 1 unit cloth.
U.S. gains 2 units wheat while U.K. gains 4 units cloth.
7. Main Views on Trade
Under the heavy pressure of high smuggling and created variety of
products during the industrial revolution, by 1860 England had
removed the last vestiges of the mercantile era .
Adam Smith's insight that free trade leads to international specialization
of labor and, usually, to greater economic well-being for all nations.
What do nations trade? (two-win games)
What the gains from trade? ( the greater economic well-being)
What is the pattern of trade? (import and export)
(supposing with two nations, two products and one factor “labor” world.
One nation should export the more efficient product and import the less
efficient product compared with the other nation. In other words, the
nation should export the less cost product and import the higher cost
product)
8. 2.4 Trade Based on Comparative
Advantage: David Ricardo
The Law of Comparative Advantage
The Gains from Trade
Exception to the Law of Comparative
Advantage
Comparative Advantage with Money
Comments
Conclusion
9. The Law of Comparative Advantage
Introduction
Countries engage in international trade for two basic
reasons:
• They are different from each other in terms of climate,
land, capital, labor, and technology.
• They try to achieve scale economies in production.
The Ricardian model is based on technological differences
across countries.
• These technological differences are reflected in
differences in the productivity of labor.
10. The Law of Comparative Advantage
David Recardo (1772-1823)
David Ricardo was one of those rare people who
achieved tremendous success and lasting fame.
After his family disinherited him for marrying outside
his Jewish faith, Ricardo made a fortune as a
stockbroker and a loan broker. When he died, his
estate was worth over $100 million in today's dollars.
At age twenty-seven, after reading Adam Smith's The Wealth of Nations,
Ricardo got excited about economics. He wrote his first economics
article at age thirty-seven and then spent only fourteen years—his last
ones—as a professional economist. His Principles of Political Economy
and Taxation was published in 1817, in which he presented the law of
comparative advantage, one of the most important and still unchallenged
laws of economics, with many practical applications.
11. Ricardo first gained notice among economists over the "bullion
controversy." In 1809 he wrote that England's inflation was the
result of the Bank of England's propensity to issue excess bank
notes. In short, Ricardo was an early believer in the quantity theory
of money, or what is known today as monetarism.
In his Essay on the Influence of a Low Price of Corn on the Profits of
Stock (1815), Ricardo articulated what came to be known as the law of
diminishing returns. One of the most famous laws of economics, it holds
that as more and more resources are combined in production with a
fixed resource—for example, as more labor and machinery are used on
a fixed amount of land—the additions to output will diminish.
Ricardo also opposed the protectionist Corn Laws(谷物法), which
restricted imports of wheat. In arguing for free trade, Ricardo formulated
the idea of comparative costs, today called comparative advantage
(LTV: Labor Theory of Value). Comparative advantage—a very subtle
idea—is the main basis for most economists' belief in free trade today.
The idea is this: a country that trades for products that it can get at lower
cost from another country is better off than if it had made the products at
home.
12. The Law of Comparative Advantage
The Concept of Law of Comparative Advantage
In a two-nation and two-commodity world economy, even if one nation
is less efficient than the other nation in the production of both
commodities, there is still a basis for mutually beneficial trade. The first
nation should specialize in the production of and export the commodity in
which its absolute disadvantage is smaller (the commodity of its
comparative advantage) and import the commodity in which its absolute
disadvantage is greater (the commodity of its comparative disadvantage).
Note that in a two-nation, two-commodity world, once it is determined
that one nation has a comparative advantage in one commodity, then the
other nation must necessarily have a comparative advantage in the other
commodity.
13. The Law of Comparative Advantage
Assumptions of the model:
• Only two countries and two commodities in the world (Home and
Foreign)
• Free Trade
• Perfect mobility of labor within each nation but immobility
between the two nations
• Constant costs of production
• No transportation cost
• No technical change
• The labor theory of value
14. The Law of Comparative Advantage
The Illustration of Comparative Advantage
Without Trade
U.S. U.K.
Wheat (bushels/man-hour) 6 1
Cloth (yards/man-hour) 4 2
Explanation: US has an absolute advantage of both wheat and
cloth with respect to UK, but the absolute advantage is greater in
wheat(6:1) than cloth (4:2), US has a comparative advantage in
wheat. On the contrary , UK’s comparative advantage in cloth
( smaller absolute disadvantage).
15. The Gains from Trade
If the trade exchange rate is equal to the domestic exchange
rate , no trade happens. Only trading partners can gains by
each specializing in the production and exporting the
commodity of its comparative advantage, international trade
happens.
E.G. (page table 2.2)
With Trade (specialization)
U.S. U.K.
Wheat (bushels/man-hour) 12 0
Cloth (yards/man-hour) 0 4
Explanation: If US exports 6w for 4c from UK, and UK exports 2c
for 1w from US, no trade happens since it is the same with
domestic exchange without trade .
16. Comparative Advantage with Money
The comparative advantage can be expressed in terms of
currency of either nation (Price difference)
E.G. See table 2.2
U.S. U.K.
Wheat (bushels/man-hour) 6 ($1) 1($2)
Cloth (yards/man-hour) 4 ($1.5) 2 ($1)
Suppose that the wage rate in US is $6 dollar per hour, since one
man-hour produces 6w in US, the price of a bushel of wheat is Pw
= $1, Pc=$1.5; Suppose UK 1pound per hour, Pw=1pound,
Pc=0.5pound. If the exchange rate 1pound =$2, Pw=$2, Pc=$1
Business people would buy the lower price of wheat in US and sell them
in UK; on the contrary buying the lower price of cloth in UK and sell
them in US.
17. Comparative Advantage with Money
The exchange rate influences the international trade
E.G. If 1 pound = $1, in UK Pw=$1 and Pc=$0.5
No trade happens in Wheat from US to UK, and UK would
export more cloth to US. Trade would be unbalanced in favor of the
UK, and the exchange rate between the dollar and the pound would
have to rise.
E.G. If 1 pound =$3, in UK Pw=$3 and Pc=$1.5( the same with US)
No trade happens in Cloth from UK to US, and US would export
more wheat to UK. Trade surplus in UK would decrease while US
trade deficit would decrease, and imbalance trade between the two
countries would decrease.
Therefore , each country need pay attention to its own currency
exchange rate to other nation’s.
18. Conclusion
We examined the Ricardian model, the simplest model
that shows how differences between countries give rise
to trade and gains from trade.
In this model, labor is the only factor of production and
countries differ only in the productivity of labor in
different industries.
In the Ricardian model, a country will export that
commodity in which it has comparative (as opposed to
absolute) labor productivity advantage.
19. Conclusion
The fact that trade benefits a country can be
shown in either of two ways:
• We can think of trade as an indirect method of
production.
• We can show that trade enlarges a country’s
consumption possibilities.
The distribution of the gains from trade
depends on the relative prices of the goods
countries produce.
20. Conclusion
Extending the one-factor, two-good model to a
world of many commodities makes it possible
to illustrate that transportation costs can give
rise to the existence of nontraded goods.
The basic prediction of the Ricardian model-
that countries will tend to export goods in
which they have relatively high productivity-
has been confirmed by a number of studies.
21. 2.5 Comparative Advantage and
Opportunity Costs
Comparative Advantage and the Labor
Theory of Value
The Opportunity Cost Theory
The Production Possibility Frontier
under Constant Costs
Opportunity Costs and Relative
Commodity Prices
Comments
Conclusion
22. The Production Possibility Frontier
under Constant Costs
Production Possibility Frontier
It is a curve that shows the alternative combinations of the two
commodities that a nation can produce by fully utilizing all of its
resources with the best technology available to it.
See table 2.4 (page 42) to show:
1. US’s opportunity cost of wheat is two-thirds of a unit of cloth, while
the opportunity cost of cloth is one and one-second units of wheat;
2. UK’s opportunity cost of wheat is two units of cloth, while the
opportunity cost of cloth is one-second of a unit of wheat;
23. The Production Possibility Frontier
under Constant Costs
Illustration of PPF
FIGURE 2-1 The Production Possibility Frontiers of the United States and
the United Kingdom.
24. Conclusion
To explain the basis for mutually beneficial trade
Labor theory of value (David Ricardo) →Opportunity
cost theory (marginalism) → (absolute) slope of
the production possibility frontier (Transformation
Curve)→ the relative price of the commodity (price
difference)→ trade basis
Opportunity cost of a commodity is equal to the relative
price of that commodity and is given by the (absolute)
slope of the production possibility frontier.
25. Conclusion
In the absence of trade, a nation’s production possibility
frontier is also its consumption frontier. With trade, each
nation can specialize in producing the commodity of its
comparative advantage and exchange part of its output with
the other nation for the commodity of its comparative
disadvantage. By so doing, both nations end up consuming
more of both commodities than without trade. With complete
specialization, the equilibrium-relative commodity prices will
be between the pretrade-relative commodity prices prevailing
in each nation.
26. 2.7 Empirical Tests of the
Ricardian Model
Examination of empirical tests of Ricardo Model
If we allow for different labor productivities in various industries in
different nations, Ricardo trade model does a reasonably good job at
explaining the patter of trade.
1. Mac Dougall in 1951 and 1952 using labor productivity and
export data for 25 industries in US and UK for the year 1937
Relative Labor Productivities and Comparative Advantage–United
States and United Kingdom.
Conclusion: Positive relationship between labor productivity and
exports, higher productivity more exports.
(see figure 2-4)
27. 2.7 Empirical Tests of the
Ricardian Model
2. Golub study in 1995
The conclusion is that in general , relative unit labor costs( the ratio of
wages to unit labor productivity) and exports were inversely related.
That is to say, the lower labor costs more exports, and verse versa.
The color line shows a clear negative correlation between relative unit
labor costs and relative exports for the 33 industries . Supporting
Ricardo model.
(See figure 2-5)
28. Chapter Summary
This chapter examined the development of trade theory
from the mercantilism to Smith, Ricardo, and Haberler and
sought to answer three basic questions: (1) what is the
basis for trade? (2) What are the gains from trade? (3) what
is the pattern of trade?
Although Ricardo theory was confirmed by many empirical
studies, the model explains neither the reason for the
difference in labor productivity or costs across nations nor
the effect of international trade on the earnings of factors.