2 pt 2 Flashcards
Dynamic gains from Trade
the effect of trade on the country’s growth rate
Increased growth leads to
additional resources being made available to, or utilized by, the trading country
international trade leads to
more efficient use of resources, higher output and income often result
Higher income leads to
more saving and investment
Additional investment leads to
a higher rate of economic growth
Free trade leads to
increases the likelihood a firm will be able to identify a supplier that most closely matches its specifications
Stephen Golub
Found relative unit labor cost to help to explain trade patterns for these nations
G.D.A. MacDougall
Examined weather nations tended to export goods in which their labor productivity is relatively high
Dynamic gain tends to
More pronounced for small nations
Increase in productivity
Leads to greater economic growth
Proponents of outsourcing
-Indirect benefits may accuse for country from where jobs were outsourced
-Repatriated earnings
