International Trade-Theory of Comparative Advantage

timer Asked: Feb 10th, 2016

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Individual Assignment

International Trade-Theory of Comparative Advantage

Due after 24 hours

The International Trade is a very important aspect in the positive growth of the world economy. It has to be regulated so as to ensure that there is free flow of trade between countries. For it to be possible certain considerations have to be taken into accounts and models have been formulated to show this such as the Ricardian model and Heckscher-Ohlin model.

The concept of comparative advantage was first formulated by economist David Ricardo as an explanation of the benefits of international trade for countries. His theory concluded that a country could increase its income by specializing in certain products and services and selling these on the international market.

Write a 700- to 950-word paper in which you explain the importance of international trade and comparative advantage. Include the following:

The theory of comparative advantage suggests that each country should narrowly focus its production.

a.  Would such a policy imply that the country should never diversify into new products?

b.  Can a country know with certainty its comparative advantage without experimenting with the production of new goods?

c.  What are the implications for national security of specialization?

The Objectives and Expectation:

A.  You will introduce the theory and address each of the questions.

B.  The assignment is to be a minimum of two pages long (title pages, bibliographies, etc.) and in APA/MLA format.

C.  A good variety of objective, high quality, current sources need to be used.

Thank you!

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