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    NAFTA & Comparative Advantage

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    Can we conclude that the effects of NAFTA are good examples of comparative advantage? Was the enactment of NAFTA a good or bad decision?

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    The "internationalization" or "globalization" of the U.S. economy has occurred in the private and public sectors, in input and output markets, and in business firms and households. David Ricardo's theory of comparative advantage , which he used to argue against the corn laws, states that specialization and free trade will benefit all trading partners (real wages will rise), even those that may be absolutely less efficient producers. A country enjoys a comparative advantage in the production of a good if that ...

    Solution Summary

    This solution discusses the "internationalization" or "globalization" of the U.S. economy through NAFTA.