Comparative Advantage: Trade Theories

This lecture by the instructor delves into the quintessential economics of globalization, focusing on comparative advantage and trade theories. It covers the concept of comparative advantage as the ability of a country to produce a good at a lower relative price than others, explaining its importance in international trade. The lecture explores various ways to understand comparative advantage, such as opportunity cost and trade as a transformation technology. It also discusses gains and pains from trade, amplifiers that enhance trade benefits, and the sources of comparative advantage according to trade theories. Through case studies and examples, the lecture illustrates how trade leads to specialization, market outcomes, and changes in production patterns, emphasizing the efficiency and benefits of trade while addressing the challenges and restructuring it may bring.