Global+Economics

**Video outline ** By Carolina Lista, Rubena St.Louis and Carlos Mayora
 * Global economics, global exchange 2: **

On section 1 (0:02 – 1:55)

Main idea: __reasons why specialisation and trade are considered **beneficial** for a country____. __

Key concepts: Comparative advantage __emphasises differences in countries **resources** and **productivity** levels.__ Economy of scale __is the greater scale of production makes production more **efficient.**__ Example iron ||
 * > **Countries** ||> **Products** ||> **Reasons for specialization** ||
 * > Pakistan ||> Rice and mangoes ||> Greenhouses ||
 * > Sweden ||> Paper and steel ||> Cold weather, forests and

On section 2 (1:57 – 3:06) Main idea: __the first country that has a comparative advantage in the production of the good is the most able to produce that good at the low opportunity cost relative to other country.__

Key concepts: Opportunity cost is __the foregone opportunity to produce some another good.__ An example of opportunity cost is if you __buy a CD with 10$__ and __you don’t spend that money in go to dinner or buy a shirt.__




 * **Country** || **No. jeans produced** || **No. cars produced** || **Opportunity cost** ||
 * America || 10 || 20 || 1 jean - 2cars ||
 * China || 6 || 6 || 1 jean - 1 car ||

__America__ has a comparative advantage in __automobiles.__ __China__ has a comparative advantage in __jeans.__

On section 3 (3:08 – 4:49)

Main idea of: __the pattern of trade that is established by Heckscher and Ohlin theory.__ Key concepts:

Heckscher and Ohlin theory __look to work determinants relatives’ labour productivity.__ Major factors in labour productivity are: 1. __Skills of the workers.__ 2. __The machinery the workers have to use.__ 3. __The organization of the firm.__

Example: **(Example)** || **Type of workforce** || **Type of industry** || **Example of product** ||
 * **Type of country**
 * Industrialize || Skilled labour product || Capital intensive || Automobiles and high- tech products ||
 * Less industrialize || Unskilled labour product || Labour intensive || Textiles and basic staples ||