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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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 …
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The country who makes the good cheapest is not the only one who makes it. Other countries will still make it even if more expensively in absolute terms because it’s still the most efficient thing they can make. Not sure if you’re getting the comparative vs absolute distinction?
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I wasn't, thanks. What are some good examples of this? I can only think of numerous counter examples to the idea that countries make what they can make most efficiently, not what they make most efficiently relative to others.
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