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Essay / Research Paper Abstract
This 3 page essay discusses economic theories of trade in terms of comparative advantages and other fundamental determinants of trade. Bibliography lists one source.
Page Count:
3 pages (~225 words per page)
File: D0_BWleontief.rtf
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Unformatted sample text from the term paper:
most popular of arguments associated with free trade is that as trade is situated in the criterion associated with the most orthodox of economic theory, there is an undeniable role
of efficiency in the process. According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices.
According to the most fundamental of economic hypothesis, trade is advantageous because it allows countries to specialize in what they are best
at, allowing trading partners to achieve a mutually beneficial relationship. It is important to remember that countries only need a comparative advantage, rather than an absolute advantage in order for
specialization to be beneficial. Because the advantages of trade are based on the theory of comparative advantage, where each country produces a particular product more efficiently than another. In essence,
the theory of comparative advantage says that it pays countries to trade because they are different. It is impossible for a country to have no comparative advantage in anything. It
may be the least efficient at everything, but it will still have a comparative advantage in the industry in which it is relatively least bad. And even if a country
were the most efficient in every industry, giving it an absolute advantage in everything, it could not have a comparative advantage in everything. In some industries, its margin would be
more impressive than in others. Ideally, each country focuses resources on producing its specialty, and then trades with one another. More products
can be made if specialization occurs. Competition is also increased if foreign suppliers can enter local markets. Companies are also less constrained and, of course, may expand beyond what is
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