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Chapter 12 Economics

BY: Chandani, Rohan, John, Matt, and Connor
by

Connor Hoffman

on 12 June 2013

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Transcript of Chapter 12 Economics

Chapter 12: Trade and globalization Resource distributions Absolute + Comparative Advantage Trade Globalization 3 categories of resources
natural (ie fertile soil)
human capital (ie knowledge of driving a cab)
physical (ie machinery)

specialization: occurs when producers decide to produce only certain goods/services abs. advantage: when a nation can produce more of a given product than other nations , using a given amount of resources
ex. China vs India Globalization: growth on global scale

most likely to buy goods from elsewhere
Ex: KFC Trade makes us richer

Absolute advantage

Ex: Oil and soybeans

Trade creates losers

Protectionism vs globalization

More progressive tax system? Globalization The benefits of globalization

Speeds up specialization
Generates more money
Ex: Civil War

Problems with protectionism

Short term success
Absolute advantage Trade and Poor CountrIes Trade is good for poor countries as well.

Kofi Annan and developing nations

Blamed them for erecting barriers that exclude developing nations from the benefits of global trade.

"Global New Deal"

Trade gives poor countries access to markets in the developed world.

Poor countries get richer

New export jobs creates competition.
Raises wages
New skills
Low level of work = Low pay.

Good opportunity for the workers?

Ex: Sweatshops in China. POOR COUNTRIES

Little to no funding towards environmental protection.

Many more diseases and sicknesses spreading throughout their country.

People working for very low wages. International Trade Trade lowers the cost of goods for consumers, which is the same as raising their incomes

Nike Factories

Cheaper goods have the same impact on our lives as higher incomes.

Lowering trade barriers has the same impact on consumers as cutting taxes.

WWII and GATT
1948-1995, average tariffs fell from 40% to 4% Sweatshops, Better Than the Alternatives In conclusion... all countries specialize and rely on others to get what they are unable to efficiently produce

a nation can have an absolute advantage, but more importantly, a comparative advantage

opportunity cost controls how advantageous it is for one country to produce a certain resource

trade benefits both sides Environment Trade

we pay others to do things for us

Why?

Imagine life without trade

driven by profit

Ex: Starbucks RICH COUNTRIES

Programs and funding to help protect and preserve the environment

Medicine and treatment readily available to all.

People working for decent wages. http://www.nytimes.com/video/2009/01/14/opinion/1231545255329/a-dirty-job.html Sweatshops, Better Than the Alternatives. Prod. Nicholas D. Kristof. Perf. Nicholas D. Kristof. YouTube. YouTube, 11 May 2009. Web. 26 May 2013. Chandani Chandani Rohan Rohan John John Matt Matt Connor Connor *What about the countries that are abundant in lots of things?
*What about the countries that do not specialize? comparative advantage: when a country can produce a product most efficiently, given all the products it could choose to produce Comparative Advantage Trade Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. Wheelan, Charles J., and Burton Gordon Malkiel. "Trade and Globalization." Naked Economics: Undressing the Dismal Science. New York: W. W. Norton, 2010. 270-93. Print. O'Sullivan, Arthur, and Steven M. Sheffrin. "International Trade." Economics: Principles in Action. Needham, MA: Prentice Hall, 2003. N. pag. Print. O'Sullivan, Arthur, and Steven M. Sheffrin. "International Trade." Economics: Principles in Action. Needham, MA: Prentice Hall, 2003. N. pag. Print. O'Sullivan, Arthur, and Steven M. Sheffrin. "International Trade." Economics: Principles in Action. Needham, MA: Prentice Hall, 2003. N. pag. Print. *law of comparative advantage* What does the U.S. have a comparative advantage in?
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