Download The Importance of International Trade in Canada

The Importance of
International Trade in Canada
Economics 11
Stewart
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Why do we trade with International
Countries?
We cannot afford to be totally self
sufficient
 Productivity and standard of living are
higher when you specialize in what you
do best and buy the rest from others
 Specialization allows for greater
economic efficiency

Globalization

The creation of a
world economy
caused by increased
international trade,
investment flows,
and the spread of
multinational
corporations
Advantages to Trade
Absolute advantage – The ability for one
economy to produce a good or service
with fewer resources than another
 Example: Your neighbour is a highly
skilled mechanic, you are a highly skilled
computer technician. Should you do your
own tune-up?
 You can accomplish more by sticking
with your specialization!

Advantages to trade
Comparative advantage- The ability of
one economy to produce a good or
service with comparatively fewer
resources than another (ex. Have a
lower opportunity cost)
 Even if one nation has absolute
advantage in every field of production,
chances are that it will have a greater
advantage in some fields over others.
