Economic theory (and I believe experimental data) show comparative advantage rather than absolute advantage drives trade. Countries will make the thing that’s cheapest for them to make, and through trade the whole economy still gets more output https://en.m.wikipedia.org/wiki/Comparative_advantage …
Does this strategy work for B? Or does this backfire in some way that I did not see? This is the strategy major manufacturing nations (Japan, Germany, US, China) took to develop. Maybe instead of free trade, we should be aiming for reciprocal trade.https://twitter.com/Molson_Hart/status/1184674911920492545 …
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I don't think what you said and what I said contradict, no?
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many economists would classically argue that B won't really bcome competitive w/o external competition. Also counter tariff could be an issue. ISI (import substitution) was largely unsuccessful in many Latin A. Nations, but IMO it is indeed a viable strategy executed right
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Usually, the states that set up an import tariff also create an export subsidy, to your point, to create external competition. Agree about counter tariff, but there are many people who argue that USA should not be doing that. Simplified example attempts to address that idea.
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Thanks. Twitter will use this to make your timeline better. UndoUndo
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