1.6 Trade and the environment

Question 1

comparative advantage

Answer 1

• different then an absolute advantage
• gains from specialization even if one country is better at producing both commodities

Question 2

unequal ecological exchange

Answer 2

ecological dumping where exports below prices of the full production coast

• increased consumption of non-renewable resources in developing countries; worse terms of trade for developing countries
• oversupply is the cause, rather then a decreasing demand; result of specialization trap
• north transfers environmental cost to the south + terms of trade move against south => wealth goes from S to N

Question 3

GATT-WTO

Answer 3

general agreements on Tariffs and Trade - World Trade Organisation

Doesn’t require actions but regulates what countries can not do in relation to trade

multilateral institution
promotion of liberalization of global trade
- common set of trade rules
- reducing trade barriers
- elimination of discriminatory treatment)

Question 4

MFN

Answer 4

most favoured nation principle

• prohibitation of quantitive restriction
• imported products treated in the same way as domestic product

+ exceptions