In this column for ECONOMIC REVIEW, I pick out the fundamentals of economics from some of the articles and explain them. You can apply the same principles to any questions that may arise in your examinations.
In his article ‘Globalisation’s peril and promise’, John Bluedorn examines the costs and benefits of globalisation. One such benefit is illustrated by the theory of comparative advantage, which is demonstrated in the following example. As in the article, let us assume there are two countries: England and Portugal, producing two goods: wine and cloth. Their unit labour requirements are shown in Table 1. The unit labour requirements mean that:
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