If there is a point on which most economists agree, it is that trade among nations makes the world better off. Yet international trade can be one of the most contentious of political issues, both domestically and between governments.
In one of the most important concepts in economics, David Ricardo observed that trade was driven by comparative rather than absolute costs. One country may be more productive than others in all goods, in if it can produce any good using fewer inputs of capital and labor than other countries to produce the same good. Ricardo’s discernment was that such a country would benefit from trading by its comparative advantage—exporting products in which its absolute advantage was greatest and importing products in which its absolute advantage was comparatively less.
Trade brings dislocation of firms and industries that have competitive disadvantage. These firms face difficult adjustment because of more efficient foreign producers and often lobby against trade. So do workers which become social barriers and often lead to import taxes or tariffs and quotas to raise the price or limit the availability of imports.
Although, international trade has an economic component a student of the discipline must also be verse in international finance, banking, exchange rates and all the measurements use to assess the economic health of a nation. Both disciplines have evolved into more technical ways of building models for study, mainly, complex matrices of inputs and outputs for simultaneous analysis. More recent models include Artificial Neural Networks (ANN) using Bayesian statistics and probabilistic models.
One must bear in mind that both disciplines require intensive study of mathematical modeling and interpretation, However, international trade also includes the study of political and social sciences.
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