lesson 2: classical vs. neo classical theories Flashcards
- is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners.
- introduces opportunity cost as a factor for analysis in choosing between different options for production
Comparative Advantage
The production of goods and services requires capital and workers. Some goods need more capital-technical equipment and machinery and are considered
capital intensive
Refusal to sell to a specific country
EMBARGOES
restrictions on the trading of goods among countries applied explicitly in terms of quantitative restrictions (Tariffs) and implicitly as in the case of stringent standard requirements (non-tariff barriers)
protectionism
According to this theory, one condition for trade is that the countries differ with respect to the availability of the factors of production. They differ if one country, for example, has many machines (capital) but few workers while another country has a lot of workers but few machines
theory of factors proportions
One country will impose a tariff or any trade barrier if it feels that the other country unduly puts tariffs on the former’s products
RETALIATION
NON-TARIFF BARRIERS
- quotas
- monetary barriers
- embargoes
- boycott
kind of dumping that the firm discriminates in favor of some foreign buyers temporarily for the purpose of eliminating some competitors and of later raising its price when the competition is trounces
PREDATORY
The first major empirical test of the H-O theory was conducted by
Wassily Leontief (1954)
creation of more local companies creates more employment opportunities. The higher the employment, the higher is the probability of economic progress
Industrialization
Refers to the wise use and management of valuable natural resources
CONSERVATION OF NATURAL RESOURCES
TARIFF BARRIERS
- specific duty
- ad valorem duty
- compound tariff
Is an international price discrimination practice in which an exporting firm deliberately sells merchandise at a lower price in a foreign market than it charges in other markets, specifically and usually its home market
DUMPING
are government-induced restrictions on international trade, which generally decrease overall economic efficiency
trade barriers
- refers to the uncontested superiority of a country or business to produce a particular good, better.
- looks at the efficiency of producing a single product.
- refers to the ability of an individual, group, or nation to produce a product or service more cheaply than another.
Absolute Advantage Theory
Refer to restrictions imposed by a government on the amount, number of pieces, or weight of goods or services that may be traded within a given period
QUOTAS
Other goods require less equipment and rely mostly on the efforts of the workers to be produced. These goods are regarded
labor-intensive
Import barriers would help the nation accumulate more crucial materials for future economic or military welfare in the form of either stockpiles or emergency capacity to produce
NATIONAL DEFENSE
kind of dumping that goes on indefinitely
PERSISTENT
in the 1950’s and 1960’s, most of the manufacturing industries in the Philippines enjoyed protection in the sense that competing imported products were subjected to high duties and taxes before they could enter the Philippine market. This was done to encourage domestic consumption of locally manufactured products
Infant Industry
Refusal to buy goods from a certain country. can be voluntary actions or movements that may not need government authorization or involvement.
BOYCOTT
Spearheaded the conservation efforts for the Philippine Eagle (non-exportation) as well as marine conservation, coral reef management, national park conservation, etc
HARIBON FOUNDATION
proponent of absolute advantage theory
adam smith
title of his book and year published
wealth of nations, london in 1776
