Geog 349: Response Paper 3

University of Washington
Geography 349 (Professor Harrington)
Response Paper 3

Questions on international trade theory
Cite DRS Ch. 6 and Harrington's online notes

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?