University
of Washington
Geography
349 (Professor
Harrington)
Response Paper 3
Questions on
international trade theory
Cite
Harrington's online notes (and optionally, DRS
Ch. 6)
These are pretty substantive questions, to help
you get really key things from the reading.
We need only 500-700 words total, so don't try to
be exhaustive. Do use your own words, and
make sure to put quoted material in quotes (if
needed, quotes should be short).
1. What's the difference between
(a) specialization and trade according to absolute advantage
and (b) specialization and trade according to comparative
advantage?
2. According to basic
neoclassical theory, what determines a country's
comparative advantage? What trade policy is
suggested by this?
3. How do "neo-technology"
theories of trade and "new trade theory" modify
the basic neoclassical understanding of
comparative advantage? How might these
newer theories affect countries' economic or trade
policies?
4. Most trade and foreign
investment are conducted by firms (which
may indeed be state-owned), but most of the trade
theory we're studying focuses on the
characteristics of countries. Why would you
expect the decisions of firms (e.g., what to
produce and how to produce it) to reflect their
countries' characteristics? Why might the
decisions of firms not reflect country
characteristics?
5. Almost all economic theories
of international trade show that free trade (as
opposed to no trade, managed trade, or trade
forced between a powerful country and its
colonies) benefits both partners' economies.
Why, then, is there so much political opposition
to trade liberalization?
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