The Comparative Advantage with Short-Term Protectionism

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The comparative advantage
With
Short-term protectionism

Module:EC-228 student number:584796
Name :xiaoran DENG

Contents

Introduction ……………………………………………………2

Comparative advantage ……………………………………… 2 How to found comparatives advantages ………………………… 4 A numerical example …………………………………………4

Dynamic comparative advantage ……………………………5 An example for infant industry…………………………………… 6

Short- term protectionism …………………………………… 9

Conclusion …………………………………………………… 9

Reference ………………………………………………………10

Introduction
In light of comparative advantage theory, discussion is made about Short-term trade protectionism can be supported by the theory of comparative advantage. This paper will be divided into two parts to explain the comparative advantage theory and short-term trade protectionism. Then find out the relationship between the comparative advantage and short-term trade protectionism. Comparative advantage is the theory can improve the yield and expand the competitor’s advantage. The comparative advantage have lots of modules. In this paper will focus on basic theory about comparative advantages and how to find advantage comparative, after that introduce the dynamic comparative advantage in a dynamic situation and the different with the traditional comparative advantage. The short-term trade is the policy to limit the foreign country’s industry import, but it is beneficial to home country’s export trade. In contrast, the government can use short-term trade policy to control the export trade to reduce the trade conflict; On the other hand, increase the comparative advantages playing an important role in the trade arena.

Comparative advantage

Suppose one country than in the production of both commodities are in another country is definitely a disadvantage, but as long as the two countries at a disadvantage in the production of inferior goods in varying degrees, the dominant position on commodity production in both countries, with varying degrees of advantage, countries are at a disadvantage in light of the disadvantages of comparative advantage in commodity production, the dominant countries in the advantages of a larger theory of comparative advantage in commodity production have a comparative advantage. Division of labor specialization and the two countries have a comparative advantage to export their goods, the two countries can benefit from trade. Example:

If a country can be relatively low opportunity cost of producing a particular product, in this respect, it has a comparative advantage, should specialize in the production of this product. The case before the division of labor:

6 days| SOFTWARE| COMPUTER| TOTAL|
COUNTRY A| 9| 30| 39|
COUNTRY B| 21| 6| 27|
TOTAL| 30| 36| 66|
According to the table, it is clearly to show that the country A and B in six days of production. Country A can made 9 softwares and 30 computers while Country B can made 21 softwares and 6 computers. The data is before the division of labor between country A and B. In six days, country A created 39 products whilst country B created 27 products. The total output with A and B is 66 products. After country A and B use division of labor:

6 days| SOFTWARE| COMPUTER| TOTAL|
COUNTRY A| 0| 60| 60|
COUNTRY B| 42| 0| 42|
TOTAL| 42| 60| 102|
As can be seen from the second table, which describing the information about two countries use the comparative advantages to change the direction of production. In six days, country A created 60 computers while the country B created 42 products. The total output has increased 36 products after the country’s reorganization of resources. It can be clearly seen from the table that these two countries use their comparative advantage can improve the yield. In this example, company A has a comparative advantage in computer and the company B has a comparative advantage in software. The standard of living can be increased in both country A and B....
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