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Essay / Research Paper Abstract
This 12 page paper is written in two parts. The first part of the paper examines the reason why global trade increased significantly between 1955 and 2004. The second part of the paper explores the potential impact of oil prices increases on the current accounts of countries that have a high level of oil exports. The bibliography cites 8 sources.
Page Count:
12 pages (~225 words per page)
File: TS14_TEintincrease.rtf
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Unformatted sample text from the term paper:
be seen as the result of different influencing factors. It may be argued that the drivers have been factors such as Adam Smiths absolute advantage and David Ricardos comparative advantage
are significant drivers of the increase in global trade (Thompson, 2007). Smith argued that each nation should concentrate on producing goods where they
have the absolute advantage. This means that where one country can produce a good cheaper then another, then they should concentrate on producing this good and then trade for the
other goods they need. Conversely, in international trade they should also import any commodity where they have the absolute disadvantage. The absolute disadvantage is where they would be seen as
being the most expensive nation to produce a good, meaning that they can only produce the commodity at a higher cost than any other nation (Baye, 2007; Nellis and Parker.
2006). It appears logical that a country who has an advantage in a particular product should aim at producing that product or
commodity whist importing the goods where it has a disadvantage. However, this is not sufficient to explain the modern complex trade patterns, and as such this theory was built upon
and developed by theorists such as Ricardo, which helps to explain, to a greater extent, why international trade takes place. Ricardo considered
how and why international trade took place and emphasized the comparative costs. This illustrated the way a country may gain the most from international trade. Ricardo states that countries should
make their decision of what commodities to produce and export by reference to that which has the smallest absolute disadvantage and import that commodity where the absolute disadvantage is the
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