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Why do people trade?

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Why do people trade? When answering this question consider the history of trade and how trade has influenced history. Consider the theories of Absolute and Comparative Advantage. Incorporate thoughts on the Ricardian model, Heckscher (1919) - Olin (1933) Theory, Leontief Paradox and the New Trade Theory.

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Why do people trade? When answering this question consider the history of trade and how trade has influenced history. Consider the theories of Absolute and Comparative Advantage. Incorporate thoughts on the Ricardian model, Heckscher (1919) Ohlin (1933) Theory, Leontief Paradox and the New Trade Theory.

Why we trade

The principal purpose of global trade is and always will be to capitalize on the gains from international trading for each party involved. The global trade models below each have one thing in common; each has attempted to examine trade patterns while suggesting methods in an attempt to take full advantage of the gains from trade.

Comparative Advantage

Comparative advantage, theorized by David Ricardo, exists when countries have marginal dominance over goods and/or services production levels, and when the opportunity cost of their production is lower. International trade affords great opportunities for workers by improving their overall living conditions. The International Monetary Fund states international trade between diverse countries facilitates trade and industry growth, higher employment levels and more apposite income standards as opposed to countries without international trade economic structures (www.imf.org, 2000).

Ricardian Model:

The Ricardian model is the most simplistic and most fundamental model of global trade that we have. The simple Ricardian model has only one manufacturing contribution, labor. Contemporary descriptions of the simple Ricardian Model presume there are two nations each manufacturing two goods and/or services, while utilizing one aspect of ...

Solution Summary

Comparative advantage, theorized by David Ricardo, exists when countries have marginal dominance over goods and/or services production levels, and when the opportunity cost of their production....includes multiple references in APA format.

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International Trade Liberalization and the Environment

Does free trade harm the environment?

Environmentalists argue that trade liberalization harms the environment. The decisions of the World Trade Organization (WTO) in particular have been the subject of much criticism. Carbaugh has described environmentalists' three primary assertions (Carbaugh, 2004):

Trade liberalization leads to a "race to the bottom" in environmental standards.
Trade liberalization conflicts with morally-conscious environmental policies.
Trade liberalization encourages trade in products that create global pollution ("pollution havens").
Proponents of trade liberalization argue that freer trade might actually improve the quality of the environment. For example, the international environmental policy of the U.S. and other industrial nations is based on the "polluter-pays principle." This approach is intended to give producers the incentive to develop more pollution-control techniques (Carbaugh, 2004).

In this project, you will recreate and evaluate the arguments and counter-arguments for all three of the environmentalists' assertions described above.

Part 1: Recreate the arguments/counter-arguments
Recreate the arguments for and against the three assertions noted above (six arguments total). Approach this assignment as an exercise in critical thinking; your goal is to represent the arguments as accurately and as thoroughly as possible. For each argument and counter-argument, present the following information:

The party you represent
Your party's interests or objectives
Your party's assertion
A summary of the available evidence that supports your party's assertion and/or examples that illustrate the assertion.
Feel free to use the Library or other Web resources to help recreate the arguments.

Part 2: Summarize and evaluate the arguments/counter-arguments
Write a 4-5 page document in which you:

Summarize each argument and counter-argument. Be sure to note the relevant parties in the debate and their interests/objectives.
Evaluate the arguments and counter-arguments. Be sure to address the following questions:
Can the conflicting positions in these debates be resolved? If yes, how? If not, why not? Your answer should be well-reasoned and supported with examples.

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