Essay: David Ricardo’s principles of competitive advantage

15 May

Essay: David Ricardo’s principles of competitive advantage

Sample Essay

In time the world opened up again to neoliberal ideologies where it was decided to keep capital markets under scrutiny and only to interfere in case of crisis. The same is the case today where the central bank of the USA stepped in to save various financial institutions that were filing bankruptcy in order to save the employees and the various related companies from shutting down as well. (Edwards S, G. P. Garcia 2008)

       There are several factors that have accelerated globalization. Among these were the realization of David Ricardo’s principles of competitive advantage which garnered many followers in the pure mathematics which proved that every country, if it specialized in its own products would benefit by trading it for products that it was not good at and could do better by trading. This ideology gained much popularity in the West where the countries felt that if they were to produce what they were best at, and allocate their resources to manufacturing and excelling in the production of that product they would gain by the lowered costs of specialization and due to the economies of scale that would not only lead to capacity maximization but also to profits in both the long and the short run. (Gary Clyde Hufbauer & Paul L. E. Grieco 2005)

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