Absolute cost difference and persistent trade imbalances : the harrodian adjustment process

Miniatura

Fecha

2014

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Editor

Pontificia Universidad Católica del Perú. Fondo Editorial

Resumen

The classical economists understood that international trade is conducted by profit-seeking export and import firms, not «nations». For instance, in his discussion of foreign trade Smith emphasizes that «private profit is the sole motive which determines the owner of any capital to employ it either in agriculture, in manufactures, or in some particular branch of the wholesale or retail trade» (Smith, 1973, p. 474). The classicals also emphasized that in any given industry, competition favors lower-cost firms because they are better able to lower prices and damage their higher-cost competitors. Smith extends this principle to the analysis of international trade, which implies that capitals located in nations with lower costs are likely to be more successful in the international arena (1973, p. 35). In other words, absolute cost advantage1 applies equally well to competition within a nation as it does to competition between nations

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Páginas 51-58

Palabras clave

Comercio internacional, Teoría económica

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Excepto se indique lo contrario, la licencia de este artículo se describe como info:eu-repo/semantics/openAccess