• Allgemein,  Politik

    Comparative Advantage and Externalities

    The best argument for free trade is probably Ricardo’s comparative advantage. The argument is as follows, that even countries that are less efficient at producing any good compared to a more developed country would be able to specialise in a given prduct that has the lowest opportunity cost to them and trade that good in an advantageous way. I personally feel that this argument should be disputed. The main reason is the trading of externalities. Specialised countries are more prone to import externalities. Many markets have natural entrance-barriers. Structural and institutional deficits arising from specialisation hinder real „creative destruction“. Argumentation for free trade follows a certain structure of argumentation: Comparative…