文档介绍：Chapter 1 International Trade
What are the reasons for international trade?
There are three main reasons: resource reasons, economic reasons, and political reasons. The resource reasons refer to the uneven distribution of resources such as natural resources, capital, and labor. The economic reasons are explained by the principal of absolute advantage and the principal of comparative advantage. Besides, nations are motivated to trade or not to trade with each other by international and domestic political needs.
What is the principal of comparative advantage?
Created by David Ricardo, the principal of comparative advantage is a basic theory for specialization and trade which says trade will benefit both nations provided only that their relative costs, that is, the ratios of their real costs measured by labor-hour or another commodity, are different for two or more commodities. In other words, trade depends on differences in comparative cost or opportunity cost, and one nation can profitably trade with another even though its real costs are higher (lower) in every commodity.
What are the benefits of international trade?
The benefits of international trade include cheaper goods, more choices of goods, wider market for domestic producers, and the growth of domestic and world economy.
4. Why does trade protectionism still exist despite the benefits of international trade?