Lecture

Modern Trade: Ricardo's Comparative Advantage

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MGT-464: Globalisation, robotics and the future of work

This course introduces students to economic globalisation with an emphasis on the role of digital technology and its impact on the future of work. ...

Description

This lecture delves into the historical shift in trade conceptualisation during the 19th century, focusing on David Ricardo's 'Principle of Comparative Advantage'. It explains how nations tend to export goods based on relative prices, leading to mutual gains from trade. The lecture also explores the impact of comparative advantage on production patterns, emphasizing efficiency and productivity. Additionally, it discusses the evolution of globalisation from laissez-faire capitalism to a more socially conscious approach, highlighting the roles of efficiency in the market and justice in government policies. Twists on traditional conceptualisations by economists like Stiglitz and Rodrik are also examined, along with extreme views on globalisation as a conspiracy.

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Related concepts (24)

Globalization

Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term globalization first appeared in the early 20th century (supplanting an earlier French term mondialization), developed its current meaning some time in the second half of the 20th century, and came into popular use in the 1990s to describe the unprecedented international connectivity of the post-Cold War world.

International trade

International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has existed throughout history (for example Uttarapatha, Silk Road, Amber Road, scramble for Africa, Atlantic slave trade, salt roads), its economic, social, and political importance has been on the rise in recent centuries.

Comparative advantage

In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. Comparative advantage describes the economic reality of the work gains from trade for individuals, firms, or nations, which arise from differences in their factor endowments or technological progress.

Economic liberalism

Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism, and his writing is generally regarded as representing the economic expression of 19th-century liberalism up until the Great Depression and rise of Keynesianism in the 20th century. Historically, economic liberalism arose in response to feudalism and mercantilism.

Economics

Economics (ˌɛkəˈnɒmᵻks,_ˌiːkə-) is a social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers.

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