The Economy's Growing and the Standard of Living in the United States

1481 Words6 Pages
During the 20th century economy has changed and international trade has been developped. It allowed to increase our standard of living. Therefore we need to understand why countries have opened their boarder and what the impact is. To do that we need to understantd what the trade bring to us in defining the comparative advantage. After that one important point is to understand which effect the technological change has on trade. Then the main point that it’s whether trade is benefical for everyone or leads to dangerous competitveness and why this behaviour can happen like protectionims and which are the consequences.

First of all we need to define what the comparative advantage is. One obvious concept is that country’s ressources can differ from a country to another. Therefore it’s easily understandable that you can have more expenses about producing one kind of good rather that another one. Moreover we need to understand a crucial concept named opportunity cost. First to make it easier assume there is only two goods in the economy, the opportunity cost is the number of good you have to give up to produce one unit of the other good. From the difference of the opportunity costs between countries it results a comparative advantage which can offer you a mutually benefit. For example, in Switzerland you should be specialized in tourism more than agriculture because Switzerland has not much land to cultivate but much more moutnais where people can skiing.

The concept of relative term is a key concept otherwise you can be mistaken with the absolute advantage which does not take into account the relative wages and prices. Even if a country has an absolute advantage in both of goods, it doesn’t mean that you can’t have a comp...

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...f the ressources. World trade is not a competition. In fact the state of mind will conduct to the protectionism. And the theory of the comparative advantage have shown us that with trade every one raises his standard of living . The fact that the traditional ressources are not the same anymore doesn’t affect the international trade. It just changes the point of view. On the whole of course for policians it is easier to show a programm that talk about competition because everyone is a bit patriotic but we need to take care in what way we are using it. Countries have to work in cooperation and coordination. With this state of mind you would be able to raise the social and environment standards of everyone. For this reason the understanding of the comparative is key factor. Trade conducts to expansion of the economy’s choices and that increases your standard of living.
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