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... theory of comparative advantage trade to describe the modern situation of absolute advantage trade. The classical model sees balanced trade between countries in finished products, with each participant self-sufficient, and only trading because a better deal in terms of goods is available through trade than through direct production.

However, balanced trade would not lead to a need for net capital inflows to finance trade deficits, which would weaken the bargaining advantage of transnational corporations. Self sufficiency would similarly weaken the bargaining advantage of transnational corporations. And trade in finished goods would reduce the advantage of transnational corporations over small business in spreading the production chain across the globe.

So if transnational corporations were to be given free reign, we would expect to see the classical vision of trade replaced by absolute advantage trade, with production dispersed around the world ... and in strategic industries, only the transnational corporation with the capability to take products through the chain from resources to finished product.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Aug 26th, 2007 at 10:48:01 AM EST

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