Naturally countries hold different resource endowments and efficiencies of production. Some nations will have labour forces more skilled in certain sectors then other countries and thus will hold better efficiencies in production in those sectors. Others may have large resource endowments; and hence the need for nations to trade in order to increase their peoples standard of living. The theory of free becomes based on the principal of comparative advantage. Nations will specialize in the …
showed first 75 words of 484 total

showed last 75 words of 484 total
…goods and services. Hence production increases as does employment. SOL will rise as unemployment falls and real incomes increases, and this is better for the entire economy. So it is clear that protection needs to be reduced in order to reduce input costs for all industries in the economy. Reducing trade barriers will create an efficient and competitive economy, resulting in an increase in imports and exports, and thus satisfying more wants of the consumer.