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Essay / Research Paper Abstract
A 10 page paper that considers different topics, such as international trade theory, macro-economics, and the impact of the global financial crisis on the automotive industry. The writer explains two international trade theories, then, reports the effects this crisis has had on the auto industry in different countries. Australia is used as the example for the effectiveness of policy related to the crisis in this industry. Bibliography lists 15 sources.
Page Count:
10 pages (~225 words per page)
File: MM12_PGfnau.rtf
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Ricardo, for instance, discussed comparative advantage in trade transactions. For Ricardo, international trade was determined by the differences between countries (The Royal Swedish Academy of Sciences, 2008). Comparative advantage relates
to countries having different opportunity costs in producing different goods (Wiens, 2008). As an example, Canada can produce a barrel of oil at a lower cost than the U.S. has
in manufacturing a car, thus, Canada has a comparative advantage in oil production and the U.S. has a comparative advantage in manufacturing cars (Wiens, 2008). The reverse of this is
that Canada has a comparative disadvantage in manufacturing cars compared to the U.S. having a relative disadvantage in producing oil (Wiens, 2008). A countrys comparative advantage or disadvantage affects
its balance of trade transactions. Canadas exports and imports of oil have increased over the years leading to a positive balance of 17.3 in 2007, i.e., they exported more in
terms of revenue than they imported (Wiens, 2008). At the same time, the U.S. has experienced decreasing revenue in exports as compared to imports of automotive products leasing to
a balance of -2.3, which means the U.S. has a deficit in terms of trade balance (Wiens, 2008). Ricardo believed that every country has something they can produce at
less cost than other countries (Tabarrok, 2008). This means that every country can have a comparative advantage if they specialize in that product or service in which they excelled (Tabarrok,
2008). Ricardos theory was expanded upon by others, including Eli Heckscher and Bertil Ohlin who suggested that comparative advantage was not obtained only by technology but also by their access
to different factors related to production (The Royal Swedish Academy of Sciences, 2008). For example, some countries have an abundance of labor while others may have an abundance of capital
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