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| the absence of barriers to the free flow of goods and services between countries |
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| North American Free Trade Agreement |
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| 19th century English economist who advanced comparative advantage theory |
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| two Swedish economists who refined Ricardo's theory but argued that comparative advantage arises from differences in national factor endowments |
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| stress that in some cases countries specialize in the production and export of particular products NOT because of underlying differences in factor endowments, but because in certain industries the world market can support only a limited number of firms (i.e. aircraft industry) |
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| MIT economist who developed what is known as "new trade theory" |
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| an economic philosophy advocating that countries should simultaneously encourage exports and discourage imports |
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| a situation in which an economic gain by one country results in an economic loss by another |
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| production of a product is more efficient that any other country producing it |
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| a situation in which all countries can benefit even if some benefit more than others |
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| countries should specialize in producing goods and services they can produce most efficiently (Ricardo); PRODUCTIVITY DIFFERENCES ARE IMPORTANT; potential world production is greater with unrestricted free trade than it is with restricted free trade |
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| postulated that US would export capital-intensive goods and import labor-intensive goods according to Heckscher-Ohlin theory. H-O theory should result in the opposite and therefore the paradox. |
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| cost advantages associated with large-scale production |
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| Porter's Diamond - See pg. 186 Fig. 5.5 |
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| Factor endowments; Firm strategy/structure/rivalry; demand conditions;related and supporting industries |
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